Demographic change, technological advance, and growth: A cross-country analysis

Population aging presents major policy challenges across the world. However, the impact on economic growth of this demographic trend remains unclear. This paper empirically investigates the impact of population aging on economic growth by considering changes in the entire age distribution of populations of over 170 countries. We find that a rise in older people as a percentage of the general population, alongside a shrinking working-age population, lowers economic growth. We also investigate the effect of technological advances on the relation between population aging and economic growth, using four plausible proxies of technological advancement: life expectancy, labor productivity, automation (robots), and total factor productivity. The analysis suggests that increasing life expectancy, total factor productivity and labor productivity help older age groups contribute more positively to future growth. More automation also benefits old age groups by reducing the old age disadvantage, therefore slowing the decline in their productivity.