Health, an ageing labour force, and the economy: Does health moderate the relationship between population age-structure and economic growth?. (October 2021) - Cylus, Jonathan
Abstract: Research often suggests that population ageing will be detrimental for the economy due to increased labour market exits and lost productivity, however the role of population health and disability at older ages is not well established. We estimate the relationship between the size of the older working age population and economic growth across 180 countries from 1990 to 2017 to explore whether a healthy older working age population, as measured by age-specific Years Lived with Disability (YLDs), can moderate the relationship between an ageing labour force and real per capita GDP growth. Using country and year fixed effects models, we find that although an increase in the 55–69 year old share of the total population is associated with a reduction in real per capita GDP growth, the decline in economic growth is moderated if the population at that age is in good health. To demonstrate the magnitude of effects, we present model predicted real per capita GDP growth for a selection of countries from 2020 through 2100 comparing the 2017 country-specific baseline YLD rate to a simulated 5% improvement in YLDs. Our findings demonstrate that economic slowdowns attributable to population ageing are avoidable through policy interventions supporting healthy and active ageing. Highlights: Many analysts expect population ageing to have adverse effects on economic growth. Whether good health at older working-ages moderates this relationship is unknown. We run fixed effects models to estimate GDP growth for 180 countries from 1990 to 2017. Ageing does not result in economic decline if older workers are in good health. Simulations suggest significant economic gains associated with health investments.