Decline and Prosper: Ageing Has Not Led to Workforce Contraction but Higher Participation and Greater Equity

Jane O'Sullivan, School of Agriculture and Food Sustainability, University Of Queensland

The overwhelmingly negative tone in reporting of population ageing and decline has created a culture of fear prompting policies to boost population growth. Yet there are many positives, not least a retreat from humanity’s unsustainable use of natural resources toward a greater harmony with nature. Unfortunately, political and public discourses focus mostly on the anticipated ratio of workers to retirees. A review of literature on ageing effects on the workforce finds most studies either use working-age proportion as a surrogate for workforce or use variations of the Cobb/Douglas production function treating age-specific workforce participation as a constant. Both approaches treat labour supply as limiting production and make no provision for labour market feedbacks on participation, productivity and income distribution. Enough countries have now experienced contraction of their working-age proportion to test these assumptions. Both cross-sectional and longitudinal analyses of OECD countries indicate labour market tightening associated with demographic ageing has indeed resulted in greater workforce participation, so that no workforce contraction was observed as the working-age proportion declined. While some further ageing is inevitable, a shortage of workers is not. Positive impacts on productivity and income distribution were also indicated. Appropriate measures of betterment in declining populations are explored.

Keywords: Economic Demography, Human Capital, Education, and Work, Longitudinal studies , Population Ageing

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