This article is spot on.
Most developed economies have been graying, thanks to low birth rates and rising life expectancy. As a result, the labor force as a proportion of the total population has been on a long-running decline. COVID impaired the labor force even further. Older workers in the U.S retired somewhat earlier than expected, and haven’t returned to the labor force.
Aging In Place
The share of the global population aged 65 years or above is projected to rise from 10% this year to 16% in 2050. The cohorts who are younger are much smaller, meaning fewer workers are supporting a larger retired population. Emerging markets like China, India, and Brazil that have been reaping benefits of a demographic dividend will soon see a dramatic reversal.
The retirement of the post-war Baby Boom generation is partly responsible for the slower growth in developed nations. A 1% fall in the supply of labor results in a similar 1% reduction in of gross domestic product. The ongoing wave of retirements is an unsettling prospect for the world economy, considering the demographic trends today in the U.S., Europe and China.
The Decline of Demographics – Northern Trust – Commentaries – Advisor Perspectives
From a global perspective, the increasing elder cohort with a shrinking youth cohort is a huge economic challenge.
I believe it will be addressed through improved business processes and dramatic increases in the use of automation.
Some countries will address this through increased inbound immigration. Countries that are perceived as good destinations will likely attract more immigrants, but many countries will not be able to solve their demographic problems with immigrations.
As noted in the quote above, some countries – such as China, India and Brazil – which have benefited from large population growth and low labor costs – will lose those economic advantages.
