The Great Demographic Reversal and Its Effect on Future Growth

Abstract

The surge in the labour force working in the world’s trading system in previous decades is now reversing. The ratio of the retired-old to workers will worsen, as longevity outdistances retirement age, particularly in those countries which earlier grew fastest. Overall output growth depends on a combination of the growth rate of the working population and their productivity. With the former declining, unless offset by a major rise in the participation rates of the elderly, growth has to be based on higher productivity per worker. While there are some reasons for hoping that we may improve on recent disappointments on this latter front, Goodhart and Pradhan are reasonably confident that overall output growth will now generally decline.