Demographic change and policy responses: Implications for the global economy

Rod Tyers*, Qun Shi

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    33 Citations (Scopus)

    Abstract

    The fertility declines associated with the final phase of the global demographic transition have led to slower population growth and accelerated ageing in developed countries and in several advanced developing countries. A global demographic and economic model is used to assess the implications of these changes for population sizes, age-gender distributions, labour force growth and their implications for economic performance. A baseline projection that incorporates declining fertility is compared with a hypothetical constant population growth scenario. The results show that slower population growth and ageing reduces average saving rates in industrial regions, yet global investment demand is also slowed and saving rates rise in developing regions, so there is no net tightening of financial markets. Increased aged labour force participation, considered one solution to the resulting rise in aged dependency in advanced regions, is found to redistribute investment in favour of the industrialised regions and hence to accelerate their per capita income growth, while conferring on the other regions compensatory terms of trade improvements. The alternative of replacement migration is found to require inconceivably large population movements. It also impairs real per capita growth in destination regions but by least in Western Europe, where the terms of trade are improved by the immigration.

    Original languageEnglish
    Pages (from-to)537-566
    Number of pages30
    JournalWorld Economy
    Volume30
    Issue number4
    DOIs
    Publication statusPublished - Apr 2007

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