Economic consequences of an aging population

Europe and Japan are experiencing the aging of their populations. Aging implies a restructuring of the economy. Political issues which arise in an aging society include 1) a voting majority for the interests of the elderly, 2) a voting majority of females, 3) the domination of the decision power in corporate and similar ruling bodies, and 4) unemployment or a long wait for promotion for younger people. Economic issues of an aging society include 1) population aging often occurs under reduced rates of growth of per capita national income, 2) the relative economic status of the elderly very much depends on the currently existing tax transfer systems, and 3) the income of families whose head is over age 65 has generally been more unequally distributed than the income for younger families. Issues concerning the labor supply of the elderly include 1) the availability of pension income and health limitations strongly influence decisions to retire and 2) older workers become disheartened and choose early retirement when facing bad reemployment prospects. In general, population aging is likely to have its most substantive effect on the overall level of productivity in an economy where technical knowledge is changing rapidly and strong competition necessitates a high degree of adaptability of the labor force.