Growth and Demographics
By Arnold Kling
Steven Nyce and Syl Schieber analyze the likelihood that the size of the labor force will start to decline in many developed countries.
It now appears that many of the developed economies will experience periods
in which the numbers of non-elderly will decline.
Moreover, in some cases, these declines will exceed the rates of labor productivity growth – implying that societies face the prospect of declining living standards. Coping with the resulting problems will require far more substantial changes in society than has been generally appreciated.
Total output per consumer is equal to total output per worker times the number of workers per consumer. They are worried that with the aging population, the number of workers per consumer will fall too rapidly to maintain total output per consumer.
For Discussion. Given this demographic outlook, is Social Security part of the solution, part of the problem, or essentially irrelevant?