Ageing dynamics of a human-capital-specific population

Abstract

BACKGROUND Research on how rising human capital affects the consequences of population ageing rarely considers the fact that the human capital of the elderly population is composed in a specific way that is shaped by their earlier schooling and work experience. For an elderly population of a fixed size and age-sex composition, this entails that the higher its human capital, the greater the total amount of public pensions to be paid. OBJECTIVE The main purpose of this paper is to analyse the link between human capital and retiree benefits and its effect on population ageing from a demographic viewpoint. METHODS We construct an old age dependency ratio (OADR), in which each person, whether in the numerator or the denominator, is assigned the number of units corresponding to his/her level of human capital. Based on data for Italy, we study the dynamics of this human-capital-specific OADR with the help of multistate population projections to 2107. RESULTS Our results show that under specific conditions a constant or moderately growing human capital may aggravate the consequences of population ageing rather than alleviate them. CONCLUSIONS With those findings, the authors would like to stimulate the debate on the search for demographic and/or socio-economic solutions to the challenges posed by population ageing.