Book contents
- Frontmatter
- Contents
- Preface
- 1 Recognition of the economics of aging
- 2 Population aging: sources
- 3 Population aging and dependency
- 4 Economic status of the elderly
- 5 Age and economic activities: life-cycle patterns
- 6 Labor supply of the elderly
- 7 Personal and market characteristics affecting retirement
- 8 Pensions and the economy
- 9 Macroeconomic response to age-structural change
- 10 Conclusion
- Notes
- Bibliography
- Index
9 - Macroeconomic response to age-structural change
Published online by Cambridge University Press: 06 October 2009
- Frontmatter
- Contents
- Preface
- 1 Recognition of the economics of aging
- 2 Population aging: sources
- 3 Population aging and dependency
- 4 Economic status of the elderly
- 5 Age and economic activities: life-cycle patterns
- 6 Labor supply of the elderly
- 7 Personal and market characteristics affecting retirement
- 8 Pensions and the economy
- 9 Macroeconomic response to age-structural change
- 10 Conclusion
- Notes
- Bibliography
- Index
Summary
Our concern here is how the economic behavior and productivity of an economy respond to population aging; that is, to increases in the relative number of older persons – those 65 and over. As a population ages owing to the decline of fertility and its approach to the replacement level, both the relative number of persons aged 18–64 and that of those over 64 increase, the latter more rapidly (in the absence of echo effects), until the age composition becomes stable and the ratio of those 65 and over to those aged 18–64 becomes stationary. With the population stationary and stable, the ratio of those aged 18–64 to the total population will fall roughly within a range of 0.58 to 0.6, and, given entry into the labor force at age 18 and withdrawal at age 65, per capita potential productivity will be in the neighborhood of a maximum. Of course, given considerable deferment of retirement beyond 64, potential productivity will be higher.
Even given fertility slightly below the replacement level, the fraction of a population aged 18–64 may remain little affected. Under these circumstances, however, two adverse effects may be experienced. First, dependency cost per capita increases insofar as cost per dependent over 65 exceeds that per dependent under 18. Second, output per person aged 18–64 will be somewhat lower if productivity per worker is lower among those over 55 or 60 than among those younger. This decline occurs because a larger fraction of those 18–64 will be over 55 or 60 in a population based on fertility below the replacement level than in a stationary or growing population.
- Type
- Chapter
- Information
- The Economics of Individual and Population Aging , pp. 142 - 155Publisher: Cambridge University PressPrint publication year: 1980