Title page
Contents
Abstract/Résumé 4
1. Introduction 7
2. Ageing and its impacts on potential output per capita 10
3. Ageing across the OECD: what are the main drivers? 12
3.1. Workforce ageing has been significant and mostly run its course in the majority of countries 20
3.2. Dependency ratios keep rising on the back of a shrinking working-age population 21
4. How does ageing affect productivity? 23
4.1. The role of age in individual and firm level productivity 25
4.2. Innovation, entrepreneurship, and business dynamism 26
4.3. Adoption of labour-saving technologies 27
4.4. Sectoral composition of aggregate demand 28
4.5. Aggregate savings and capital deepening 29
4.6. Increased government spending on pensions and health 30
4.7. Further results on the aggregate impact of ageing on productivity 30
5. Policies to mitigate ageing-related headwinds to growth and productivity 33
5.1. Resisting working-age population decline 33
5.2. Promoting healthy ageing 34
5.3. Better mobilising labour resources in all age groups 37
5.4. Improving job quality 42
6. Conclusions and potential future work 44
References 46
Annex A. Additional figures 53
Table 1. The old-age population is growing rapidly in the OECD 8
Table 2. Productivity and ageing: a summary of the evidence 24
Figure 1. The working-age population will shrink in many countries 8
Figure 2. Old-age dependency will increase in all OECD countries 9
Figure 3. Ageing and its impacts on the supply-side determinants of GDP per capita 10
Figure 4. Large declines in GDP per capita due to shrinking employment to population ratios 11
Figure 5. Fertility rates have dropped while life expectancy increases 13
Figure 6. Life expectancy is increasing throughout the OECD 14
Figure 7. Gains in life expectancy at 65 have slowed over the past decade 15
Figure 8. Large cross-country differences and growing population share of foreign-born in most of the OECD 16
Figure 9. The age distribution of immigrants is more concentrated in the working age 17
Figure 10. Further immigration may help prevent a decline in the working-age population but can only play a moderate role in holding back the strong rise in old-age dependency 18
Figure 11. Demographic shifts in the working-age population have mostly run their course, with further ageing primarily due to a rising share of the retirement-age population 19
Figure 12. The working-age population is getting older, bet less rapidly than in the past 21
Figure 13. Dependency ratios continue rising as the workforce starts shrinking (OECD total) 22
Figure 14. Longevity gains are not the main driver of the current rapid increase in old-age dependency ratios 23
Figure 15. The hump-shaped relationship between individual productivity and age: an illustration 25
Figure 16. Most founders of start-ups are middle-aged 27
Figure 17. Population ageing is associated with the adoption of industrial robots 28
Figure 18. Age-wealth profiles for selected countries 29
Figure 19. Ageing, GDP per capita and productivity growth in the OECD (1995-2022) 31
Figure 20. Productive contributions of people aged over 60 (2015) 32
Figure 21. Life expectancy and health-adjusted life expectancy at 60 vary a lot across countries with a strong positive correlation 35
Figure 22. Gains in life expectancy and health status between 2000 and 2019 have been large 35
Figure 23. Lower-income elderly report more health problems 36
Figure 24. Effective and normal retirement ages differ significantly in most countries (2022) 38
Figure 25. Employment rates of older age groups and of women have been rising since the 1990s 39
Figure 26. The impact of ageing on GDP per capita depends on the length of working lives 40
Figure 27. Potential gains on GDP per capita from raising employment rates to those in best performing countries exceed the projected drag from ageing in most OECD countries 41
Figure 28. The quality of the working environment positively affects older workers' participation 43
Figure 29. Older workers participate less in training 44
Boxes
Box 1. Will life expectancy continue to rise at the same pace as in the past? 14
Box 2. Can immigration prevent population ageing and workforce shrinkage? 16
Box 3. What drives the current rapid increase in old-age dependency ratios? 22
Box 4. Older people's economic contribution through non-market activities is large 32
Box 5. Potential contribution to output per capita from mobilising labour resources in different groups 39
Annex Figures
Figure A.1. Population structures continue to shift towards older ages in all OECD countries 53
Figure A.2. Small differences in hours worked between older and prime-age workers 54
Figure A.3. Stabilising old-age dependency ratio through immigration requires high net migration rates - even if fertility rates are larger among immigrants 55