If the proportion of dependent age group increases in the composition of population, how will it affect the economy of the country?
Answers
Answer:
Explanation:
The demographic age profiles in OECD economies are significantly changing. The average proportion of the population aged 60+ is projected to increase from 16% in 1970 to 29% in 2030, with most of the corresponding decline experienced in the 0-19 age group. Demographic changes, in particular their effect on labour supply, are often mentioned as one of the ‘headwinds’ of the observed slowdown in macroeconomic performance in advanced economies (Gordon 2012, 2014; Fernald and Jones 2014). Although important, this narrow interpretation may restrict the impact of demographic changes on the macroeconomy. In this column we take a more general view, arguing that changes in the demographic structure, defined as the variations in proportions of the population in each age group from year to year, matters for macroeconomic activity and may also be related to innovation.
A big factor in determining the impact of an ageing population is future rates of economic growth. ... This decline in economic growth will increase the pressure on public finances from an ageing population. Strong economic growth, increases tax revenues and makes it easier to fund pension commitments.