Between 2000 and 2050, the share of thepopulation aged 60 and over is projected to increase inevery country in the world. Although labor forceparticipation rates are projected to decline from 2000 to2040 in most countries, due mainly to changes in their agedistributions, labor force- to-population ratios willactually increase in most countries. This is because lowfertility will cause lower youth dependency that is morethan enough to offset the skewing of adults toward the olderages at which labor force participation is lower. Theincrease in labor-force-to-population ratios will be furthermagnified by increases in age-specific rates of female laborforce participation associated with fertility declines.These factors suggest that economic growth will continueapace, notwithstanding the phenomenon of population aging.For the Organization for Economic Co-operation andDevelopment (OECD) countries, the declines projected tooccur in both labor force participation andlabor-force-to-population ratios suggest modest declines inthe pace of economic growth. But even these effects can bemitigated by behavioral responses to population aging-in theform of higher savings for retirement, greater labor forceparticipation, and increased immigration from labor-surplusto labor-deficit countries. Countries that can facilitatesuch changes may be able to limit the adverse consequencesof population aging. When seen through the lens of severalmitigating considerations, there is reason to think thatpopulation aging in developed countries may have less effectthan some have predicted. In addition, policy responsesrelated to retirement incentives, pension funding methods,investments in health care of the elderly, and immigrationcan further ameliorate the effect of population aging oneconomic growth.
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