Population Ageing Negatively Affects Productivity

Abstract

Population ageing is likely to lead to lower productivity than what the situation would be if the population did not age. This is both because the workforce grows older and because a lower proportion of the population are working. Shorter working lives coupled with increased overall life expectancy, low fertility and ageing of the baby boomers both ages and shrinks the economically active share of the population. This is likely to have massive implications for work productivity and overall economic growth. Over the last decades, despite longer life spans, working lives have become several years shorter than what was previously the norm. In many ageing economies, an average worker spends more years out of the workforce than in it even today. As life expectancy has continued to increase by more than a year every decade, it becomes increasingly difficult to keep the length of retirement fixed or just stabilise the proportion of people's lives that they spend in retirement.