The Macro Challenges of Population Aging

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Apr 14, 2021, 13:52 ET

WASHINGTON, April 14, 2021 /PRNewswire/ -- A new paper jointly released today by The Concord Coalition and the Global Aging Institute (GAI) warns that the aging of the U.S. population not only threatens to overwhelm the budget, but could also usher in a future of permanently slower economic growth and diminished geopolitical stature. The paper, entitled The Macro Challenges of Population Aging, is the fifth in a series of issue briefs on the aging of America called The Shape of Things to Come.

"The dramatic shift in the age structure and growth rate of the U.S. population poses a series of challenges that reach far beyond the impact on the federal budget," said Robert L. Bixby, executive director of The Concord Coalition. "The aging of America could affect everything from employment and productivity growth to the nation's social mood and its place in the world order. In this issue brief, we take a broad look at the macro implications of population aging. The implications are sobering, and we cannot afford to ignore them."

"Demography may not be destiny, but it can exercise a powerful influence on the economy and society, sometimes leaning with economic growth and sometimes leaning against it. Unfortunately, America, along with the rest of the developed world, has arrived at a juncture where the impact of demographic change is on balance likely to be negative," said Richard Jackson, president and founder of GAI.

Macro challenges identified in the issue brief include:

As the ratio of elderly to working-age adults increases, fiscal burdens will rise.
As the growth rate in the working-age population slows, so will employment growth and GDP growth.
Productivity growth may also decline, and along with it growth in living standards.
As the electorate ages, the social mood may come to be characterized by greater risk-aversion and shorter time horizons.
As America's population and economy grow more slowly, its geopolitical stature could diminish.

The issue brief also identifies policy responses that could mitigate the negative impact of population aging, including increasing net immigration and increasing labor-force participation, especially at older ages. "An aging America can still be a prosperous America. Ensuring a positive outcome, however, will require confronting the challenges posed by population aging. Doing so successfully will test our ability to change, adapt, and evolve. Yet thankfully, that ability has always been one of America's defining characteristics," Jackson said.

To read the whole paper, click here. Other briefs in the series can be found here.

The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC

SOURCE The Concord Coalition