A rapidly aging population means there are fewer working-age people in the economy. This leads to a supply shortage of qualified workers, making it more difficult for businesses to fill in-demand roles.
Population aging induces growing costs in healthcare services, due to an increase in the utilization of age-related procedures and treatments that are pushing up costs of long-term care, which are expected to grow at a faster pace than other healthcare needs.
An aging population and slower labor force growth affect economies in many ways—the growth of GDP slows, working-age people pay more to support the elderly, and public budgets strain under the burden of the higher total cost of health and retirement programs for old people.
Population aging will likely lead to declining labor forces, lower fertility, and an increase in the age dependency ratio, the ratio of working-age to old-age individuals.
As the population grows older, an increasing share of the workforce will be past age 60. Older workers have often been considered less productive than younger ones, raising the issue of whether an aging workforce will also be a less productive one. There is little evidence the aging workforce has hurt productivity.
The impact of population aging is enormous and multifaceted i.e., deteriorating fiscal balance, changes in patterns of saving and investment, shortage in labor supply, lack of adequate welfare system, particular in developing economies, a possible decline in productivity and economic growth, and ineffectiveness of
Population aging now affects economic growth, formal and informal social support systems, and the ability of states and communities to provide resources for older citizens. We can think about preparing for older age on both an individual and societal level.
“They earn wages, spend more money, generate tax revenue, give back to social causes, and create demand for products and services that stimulates job growth,” she says. The Longevity Economy Outlook report draws on national data on how much people age 50 and older spend, earn working and pay in taxes.
Age structure data allow the rate of growth (or decline) to be associated with a population’s level of economic development. For example, the population of a country with rapid growth has a triangle-shaped age structure with a greater proportion of younger individuals who are at or close to reproductive age.
As an ageing society is characterised by declining labor productivity and rising price levels, the international competitiveness of the economy is declining. As a result, this society will export fewer goods and services and tend to import more instead. This will result in a decline in the current account balance.
The two main generally accepted underlying causes of aging populations are longer life expectancy and lower fertility. Conclusion: As aging has multiple social, political, and economic effects, the development and implementation of new policies toward the elderly and aging of population are very important.
Population ageing creates the need for particular forms of social policy. In later life, people face greater income uncertainty, as well as increasing health and care needs. However, the policy challenges for north and south are distinct.