<p>It is actually not clear that this will level off. In fact a recent influential paper  (<a href="https://web.stanford.edu/%7Echadj/emptyplanet.pdf" rel="nofollow noreferrer">Jones 2022</a>) looking at the interaction between aging population and economic growth concluded that there is a possible feedback loop where aging leads to stagnating living standards, and eventual empty earth scenario where human race dies out. Hence, if we take this research seriously, unless policies are implemented to increase birth rates (and it is not clear what such policies are because research shows that child subsidies are not very effective given their cost <a href="https://www.nber.org/papers/w13700" rel="nofollow noreferrer">Cohen et al 2009</a>). The only temporary fix that works is increased immigration, but that is also zero-sum game because other countries are also competing for those migrants, including their home country.</p>
<p>Now the paper is definitely not the last word on this issue. The economics of aging became somewhat researched topic just very recently. For example, the model does not work with heterogenous agents. I believe it is not unreasonable to say that culture, religion and other aspects along which different groups of people differ also affect fertility. If this is so, then we will only see those groups with low fertility rates dying out, and when that happens the population pyramid levels off. But I have to do speculation here, it would be too cumbersome to re-estimate heterogenous version of Jones (2022) for SE post, and there might be important hidden feedback loops/endogeneities this speculation misses.</p>

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2024-09-21T12:31:23.813Z
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1muflon1
<p>Unclear if this is purely an economics question.</p>
<p>It is well known that many Western countries are suffering increasingly from having aging populations. In particular, in the UK, Government projections indicate the Old Age Support Ratio will fall by almost a third between 2022 and 2037.<span class="math-container">$^1$</span></p>
<p>This causes increasing strain in terms of healthcare costs, pension costs, etc, with the fundamental issue seeming to be that these changes are outpacing economic growth (e.g. the UK NHS has seen above inflation funding increases over the last decade, but this is far outpaced by the increase required due to demographic changes).</p>
<p>My question is this: do we know when it will end? At some point, surely, the population pyramid must level out. Surely at some point the issue must stabilise, at which point economic growth can slowly chip away at the problem, rather than continually going backwards. When is this expected to occur for the UK?</p>
<p>I should clarify I’m not just purely referring to the demographics, since I’m interested in the economic consequences arising from those demographics - I am assuming fixing one problem will fix the other though.</p>
<p>¹ <a href="https://assets.publishing.service.gov.uk/media/5d273adce5274a5862768ff9/future-of-an-ageing-population.pdf" rel="nofollow noreferrer">https://assets.publishing.service.gov.uk/media/5d273adce5274a5862768ff9/future-of-an-ageing-population.pdf</a></p>

<population-economics><demographics><demography>
When will the economic consequences of aging populations level out?
Nethesis
# When will the economic consequences of aging populations level out?

(Asked by: username_0 on 2024-09-21)

Unclear if this is purely an economics question.

It is well known that many Western countries are suffering increasingly from having aging populations. In particular, in the UK, Government projections indicate the Old Age Support Ratio will fall by almost a third between 2022 and 2037.$^1$

This causes increasing strain in terms of healthcare costs, pension costs, etc, with the fundamental issue seeming to be that these changes are outpacing economic growth (e.g. the UK NHS has seen above inflation funding increases over the last decade, but this is far outpaced by the increase required due to demographic changes).

My question is this: do we know when it will end? At some point, surely, the population pyramid must level out. Surely at some point the issue must stabilise, at which point economic growth can slowly chip away at the problem, rather than continually going backwards. When is this expected to occur for the UK?

I should clarify I’m not just purely referring to the demographics, since I’m interested in the economic consequences arising from those demographics - I am assuming fixing one problem will fix the other though.

¹ <https://assets.publishing.service.gov.uk/media/5d273adce5274a5862768ff9/future-of-an-ageing-population.pdf>

**Tags:** population-economics, demographics, demography

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## 1 answers

### Answer by username_1 on 2024-09-21. Score: 3 | Accepted answer

It is actually not clear that this will level off. In fact a recent influential paper ([Jones 2022](https://web.stanford.edu/%7Echadj/emptyplanet.pdf)) looking at the interaction between aging population and economic growth concluded that there is a possible feedback loop where aging leads to stagnating living standards, and eventual empty earth scenario where human race dies out. Hence, if we take this research seriously, unless policies are implemented to increase birth rates (and it is not clear what such policies are because research shows that child subsidies are not very effective given their cost [Cohen et al 2009](https://www.nber.org/papers/w13700)). The only temporary fix that works is increased immigration, but that is also zero-sum game because other countries are also competing for those migrants, including their home country.

Now the paper is definitely not the last word on this issue. The economics of aging became somewhat researched topic just very recently. For example, the model does not work with heterogenous agents. I believe it is not unreasonable to say that culture, religion and other aspects along which different groups of people differ also affect fertility. If this is so, then we will only see those groups with low fertility rates dying out, and when that happens the population pyramid levels off. But I have to do speculation here, it would be too cumbersome to re-estimate heterogenous version of Jones (2022) for SE post, and there might be important hidden feedback loops/endogeneities this speculation misses.


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