Economic Effects Of US Aging Population

Population aging is expected to slow US economic growth. We use variation in the predetermined component of population aging across states to estimate the impact of aging on growth in GDP per capita for 1980–2010. We find that each 10 percent increase in the fraction of the population age 60+ decreased per capita GDP by 5.5 percent. One-third of the reduction arose from slower employment growth; two-thirds due to slower labor productivity growth. Labor compensation and wages also declined in response. Our estimate implies population aging reduced the growth rate in GDP per capita by 0.3 percentage points per year during 1980–2010.

I suppose Japan, Italy & China will have a much tougher economic time of it due their worse demographic issues.

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It is not that straightforward. The two countries that will be the global manufacturing hub are Mexico and the US. For now we control many of the major plants in Mexico. We have much less expensive labor in Mexico than Chinese labor.

A couple of other effects of the current large aging population bulge:
-They/we have a large accumulation of wealth. Even normal patterns of spending helps power the consumer spending that has been keeping the US economy out of recession.
-These accumulated trillions will be passed on, largely tax exempt, as aging takes it toll.


Saying things doesn’t make them true.

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I’m sure the Mexican workers are happy to accept less than the Chinese…

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I am beginning to wonder if the other side of the aisle just wishes our future success would not happen.

In fact their pay has been rising. Rising pay and the continuation of rising pay makes anyone happier.