The economic impact of prospective population changes in advanced industrial countries: an historical perspective

Demographic projections to the year 2050 for advanced industrial nations, implying low or negative population growth and a sharp rise in old age dependency, have created concerns about the long-term economic outlook in these countries. An analysis of these projections in the light of the demographic and economic experience of the past century raises doubt about these concerns. There is little empirical evidence that declining population growth has slowed the rate of economic growth. Although the burden of aged dependents will reach a new high, the projected total dependency rate is not out of line with prior experience. Thus, the ability of the working population to shoulder the burden of higher taxes to support programs for older dependents will be greater because of reduced needs to support younger dependents. This conclusion holds for a number of variant projections, the only clear exception being one that implies a mortality revolution at older ages.