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Unintended but Positive

Five Long-term Consequences of Population Ageing
Source: TatyanaGl

In a recent study, Fanny Kluge, Emilio Zagheni, Elke Loichinger and Tobias Vogt explore how different areas of life might be affected as populations grow older and smaller in Germany. The country is at a relatively advanced stage of the demographic transition, which makes it ideal to study the potential long-run implications of population ageing. The analysis mainly investigates what will happen if conditions observed today prevail. This is then combined with medium-term population forecasts in order to show what could happen on the macro level, particularly in the areas of monetary production and consumption, environment, the labour market, health and time use if a different population structure is assumed.


Results show that in the long run, having an older and smaller population can be beneficial to societies. For instance, it contributes to lower carbon emission levels due to changes in aggregate consumption patterns. Having a higher share of the population with tertiary education could be beneficial for economic growth in the long run, and could compensate, at least in part, for absolute and relative declines in the number of economically active persons. Inherited wealth will have to be split among a smaller number of siblings, which could compensate for an increase in public transfers via the pay-as-you-go pension system.


 


A better educated labour force


Keeping the labour force participation profiles fixed at the levels observed in 2008 and combining them with the education-specific population projections leads to an absolute labour force size of 29.6 million in 2053, which represents a reduction of almost one-third compared to 2008. However the authors also expect significant changes in the educational profile of the future labour force. Whilst the share of the labour force with tertiary education was 25% in 2008, it is projected to rise to 33% in 2033, and to further increase to 41% in 2053. This change is expected to happen among all of the age groups, although to varying degrees. Increases in the labour force participation rates of women and people over age 50 are also likely to be observed in the future. 


 


Fewer emissions


Regarding trends in emissions, the authors observed that population ageing initially tends to increase emissions as a growing number of people pass through the ages at which it peaks. In this sense, it is expected that the effect of the changing population size and age structure might continue to contribute to a more than 30% increase in emissions since 1950. But in the long run, as the proportion of people older than 80 continues to increase and the population size shrinks, emissions would decrease and reach pre-1950 levels – assuming that the age specific behavioural contribution to emissions would not change.


 


Wealthier grandchildren


On average people inherit wealth at a later stage of their life course. The general increase in life expectancy at the mean age of childbearing seems to have stalled during the past decade, as fertility postponement counteracted gains in life expectancy. However, in the coming decades, it is expected that the effect of continued gains in life expectancy will prevail. Assuming that people do not use up all of their savings during retirement and that fertility remains low, gains in life expectancy, coupled with the smaller size of younger generations, may also translate into larger per capita inheritance. As the age at which people experience the death of a family member is expected to increase over time, individuals will receive bequests, on average, after they have established themselves professionally and are potentially close to retirement. Bequests may thus act as a type of equalizer between generations. The family members who stand to benefit the most – albeit indirectly – could be the grandchildren, who may receive financial help from their parents as they attend college or form a family.


 


Healthier senior citizens


Results related to this topic confirm once more the findings from previous literature. Estimations indicate that the average man could spend around 80% of his lifetime in good health in 2050, compared to 63% today. In 2050, the share of the lifetime spent in good health is expected to be seven percentage points lower among women than it is among men. Still, the average woman in 2050 will likely spend over 70% of her lifetime in good health, compared to less than 50% in the past and about 60% today. Additionally, the onset of care need for spouses or elderly members of the household could be pushed to higher ages.


Between 1984 and 2011, the average age at which women reported having to care for an elderly family member rose by 13 years, from 36 to 49 years, among women. Assuming that the pace of improvement is similar in the future, women could wait an additional 19 years, reaching age 68, before they would need to devote time to care.


 


More leisure time


Assuming the currently observed profiles continue, the relationship between leisure, work and housework is expected to change in the future. The authors found that the amount of time devoted to home production is likely to exceed the time spent performing market work. The amount of time spent on market work as a share of the total time available was only 14.5% in 2010, and is expected to decrease to 11.9% by 2060. The analysis showed that the share of time spent in what we call leisure – i.e., activities other than market work, home production or sleeping – is set to increase slightly over the study period among the older population. For the average individual, the share of time spent working is projected to be 7.4%, while the share of time spent in leisure activities is likely to account for nearly half of the person’s lifetime. Thus, the ageing of the population will lead to an increase in leisure time, if no further adjustments are made.


 


This Population Digest has been published with financial support from the Progress Programme of the European Union in the framework of the project “Supporting a Partnership for Enhancing Europe’s Capacity to Tackle Demo­graphic and Societal Change”.

Author(s) of the original publication: 
Writer: 
Sigrun Matthiesen