| Seminars
Workshops and Conferences
Health Systems, Population Health, and Development in China and India
Saturday, March 25, 2006
Population Aging and Economic Growth, May 18-19, 2007
Sponsored by the Program on the Global Demography of Aging (with funds from grant number: 5 P30 AG024409 from the National Institute on Aging)
Program on the Global Demography of Aging
Location: 104 Mount Auburn Street, Cambridge, MA
Email: pgda_high@harvard.edu
Phone: +1 617-495-7927
Fax: + 1 617-495-8231
The world is entering substantially uncharted waters in terms of the size of elderly populations. The shift in age structure is the result of several phenomena: recent declines in fertility rates, recent increases in life expectancy, and the dynamic evolution resulting from past variations in birth and death rates. The number of people over the age of 60 is expected to reach 1 billion by 2020 and almost 2 billion by 2050 (representing 22 percent of the world’s population). The proportion of individuals aged 80 or over is projected to rise from 1 percent to 4 percent of the global population by 2050.
There is also mounting evidence that the elderly are healthier than before. In a phenomenon referred to by demographers and health specialists as the “compression of morbidity”, the length of healthy old-age appears to be increasing. Part of this increase is due to increases in the length of life, and part to even greater increases in the length of life free of chronic illness. The net effect is a decline in the lifetime burden of illness (as measured in years unwell).
Since different age groups have different economic needs and productive capacities, a country's economic characteristics may be expected to change as its population ages. A standard approach to assessing these changes is to assume constant age-specific behavior with respect to earnings, employment, and savings, and to assess the implications of changes in the relative size of different age groups for these fundamental contributors to economic growth. However, the simple application of this approach would likely be misleading. First, there will be general equilibrium feedback effects through wages and prices that will change behavior. Second, behavioral changes induced by changing expectations about the life cycle, involving labor supply and savings, are likely to influence the economic consequences of aging. Third, aging and macroeconomic performance are mediated by the institutional context (e.g., retirement policy, pension and health care systems, efficiency of labor and capital markets, and the structure of regional and global economic systems). The policy environment may itself be influenced by population aging, depending on the voting and other political behavior of an aging electorate – whose needs and interests differ from those of younger people.
Population aging may be expected to require increased current savings to finance more person-years spent living in partial or full retirement (especially given public and private retirement incentives in many countries). The expected savings boost will likely affect financial markets, rates of return, and thereby investment. Net transfers across generations may also adjust. International capital flows may also be affected, especially insofar as different countries’ demographic cycles are out of phase.
The manner in which aging affects savings will depend in part on retirement systems. Actuarially fair systems that do not encourage people to retire before they would otherwise choose to do so may be important in ensuring optimal retirement behavior from a societal point of view.
Population aging will likely cause reductions in aggregate labor supply and will change the composition of the labor force (particularly as measured by worker experience). One might also expect an increase in the general level of wages and a fall in unemployment rates, along with an increase in the demand for labor-intensive foreign goods and certain services (e.g., medical tourism). The prospect of labor shortages may also have large effects on the incentives for education and immigration and the development and reliance on new capital-intensive technologies.
The health and long-term elder care sectors are likely to expand with population aging. The outputs of these sectors are largely non-traded and labor-intensive, and may have a low rate of technical progress. There are accounting as well as economic analysis issues here, particularly in regard to accounting for health care in the national income accounts and measuring technical progress.
Here is a list of papers to be presented at this workshop:
Amaral, Ernesto F., Eduardo Rios-Neto, Daniel S. Hamermesh, and Joseph E. Potter: Age and Education in the Course of Development: Does Composition Matter?
Bloom, David, David Canning, Guenther Fink and Jocelyn Finlay: Demographic Change, Institutional Settings and Labor Supply
Bommier, Antoine: Mortality Decline and Aggregate Capital Accumulation
Feyrer, James: Demographics, Management Quality, and the US Productivity Slowdown
Lee, Ron and Andy Mason: Age, Aging and Economic Growth
Philipson, Tom, Anupam B. Jena, Casey B. Mulligan, and Eric C. Sun: The Value of Life in General Equilibrium
Soares, Rodrigo and Bruno Falcão: The Demographic Transition and the Sexual Division of Labor
Weil, David and Sebnem Kalemli-Ozcan: Mortality Change, the Uncertainty Effect, and Retirement
Weiss, Matthias, Axel Börsch-Supan and Ismail Düzgün: Age and Productivity in Work Teams: Evidence from the Assembly Line
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