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Dem Demographics

(April 27, 2004) - Watch the PBS show World In The Balance. Here are some tidbits:

  • First, there is the problem of shrinking numbers of workers. Beginning around 2010, the workforce decline will average about 1 percent a year for at least 20 to 30 years. A nation's economic output, its Gross Domestic Product (GDP), is the number of workers times the average income per worker. With a labor force shrinkage of about 1 percent a year, Japan could see long recessions lasting a decade or more. You might see the real incomes of workers rising during that period, but rising income per worker won't necessarily make up for the contractionary effect of a shrinking labor force on GDP.

    The other way that aging and depopulation will affect the economy is that there will be shrinking numbers of consumers. Consumer spending accounts for two-thirds of Japanese GDP, and it hasn't grown for many, many months. There are some indications that this is starting to turn around in the current cyclical recovery, but we're looking at the prospect of very low domestic consumption growth going forward.

    The third way that aging might affect economic growth is that older people aren't as innovative, technically savvy, or willing to take risks as younger people. So we could have shrinking economies with shrinking numbers of workers and consumers, and an older, less innovative, less well-educated workforce. All of these factors could combine to create tremendous economic adversity.-

    Paul Hewitt deputy commissioner for policy at the Social Security Administration and former director of the Center for Strategic and International Studies' Global Aging Initiative
  • In this matching game, learn more about demographic markers that both reflect a country's culture and population as well as shape its future course.
  • Populations in both rich and poor nations are on a course to change dramatically in the coming decades. These changes could radically impact economies as well as have enormous consequences for local and global environments. In this quiz, explore what may lie ahead.

John Sumser

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