MIT Sloan Management Review Article on The New Economic Benefits of Older Workers

Many countries with aging workers also have growing economic productivity. What’s behind this counterintuitive finding?

Demographics are shifting: The number of people globally age 65 and older will soon eclipse the number who are five years old and younger, according to recent U.S. Census Bureau data. This shift is being met with economic anxiety in many quarters, with theories that an aging population is a threat to economic prosperity. Some argue that an older workforce will be less productive, lacking the dynamic skills of younger workers. Others speculate that an older population will create an excess of savings over investment, leading to slow growth and secular stagnation. Others say that a wave of retirees is likely to take important skills out of the marketplace.

Our recent research suggests that much of this panic may be overblown. In our empirical work, we find no evidence that countries with rapidly aging populations are experiencing slower growth. Many, such as Germany, are growing rapidly instead.

About the Author

Daron Acemolgu is the Elizabeth and James Killian Professor of Economics at MIT. His primary areas of study are human capital, wage inequality, unemployment, search theory, and economic growth. Pascual Restrepo is an assistant professor at Boston University in the fields of macro, labor, and political economics. He tweets @pascualrpo. This article is based on their research paper “Secular Stagnation? The Effect of Aging on Economic Growth in the Age of Automation“ from January 2017.

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