Aging and productivity in Latin America

Abstract

This article considers how changes in Latin American countries’ age structures may affect their long-term economic performance through the impact on labor supply, dependency ratios, and productivity. It analyzes fourteen Latin American countries using population projections for 2015–2050 and considering three scenarios. The basic scenario assumes constant sex-and age-specific behavior concerning employment, while the other two scenarios imply increases in female activity rates and significant human capital accumulation. The results illustrate the heterogeneity of Latin American countries. In some of them, major productivity increases can only be achieved through substantial changes in the incorporation of women into the labor market, and especially in the educational level of the population as a whole. However, in most of the region’s countries, the demographic factor is still favorable and there is scope to exploit the demographic dividend.