People are living longer and having fewer children which is leading to a population older on average than at any time in history.
Life expectancy in developed countries has lengthened at an average pace of three months per year and fertility has fallen below replacement rate.
Most economic discussions of this trend have so far focused on the potential problems including challenges to pension systems, economic growth and healthcare costs.
However, according to a study in the journal PLOS ONE, population ageing and the compositional change which goes along with it may turn out to have a positive impact on society.
“In order to give a more complete picture of population ageing, it is necessary to include both positive and negative effects of population ageing,” says IIASA (International Institute for Applied Systems Analysis) researcher Elke Loichinger.
The researchers chose to use Germany as a case study because the country is at an advanced stage of the demographic transition, with a current fertility rate of around 1.4 and a median age 44.3 years.
They identified five areas in which population ageing could bring net benefits:
- Increased productivity: While population ageing will likely lead to a decline in the labour force, expected increases in workers’ education levels can partly compensate for this decline through higher productivity.
- Good for the environment: Changes in the age structure and a declining population size are associated with reduced consumption of energy-intensive goods and lower carbon dioxide emissions.
- Sharing wealth with the younger generations: As life expectancy increases, people inherit on average at older ages and potentially use some of the inheritance to either fund their retirement or help their children financially as they become adults. As families have fewer children, inheritance will be split between fewer people so that, all else being constant, individuals get more on average.
- Health: As people live longer, they also stay healthier longer. The average German man in 2050 will spend 80% of his lifetime in good health, compared to 63% today.
- Quality of life: The study suggests that the relationship between leisure, work, and housework will change in the future. Leisure time will increase.
While the study focused on Germany, the researchers say the findings are applicable across ageing societies.