Immigration, Labour Force Participation or Labour Productivity as Policy Responses to Ageing: A Comparative Study

Peter McDonald, Australian National University
Jeromey Temple, Australian National University
Ariane J. Utomo, Australian National University

Population ageing, all else being equal, reduces the growth rate of GDP per capita. Countries now face such a reduction as the baby-boom generation enters the retirement ages. The severity of the impact varies from country to country reflecting their past demography. Using the program, MoDEM2, this paper examines the varying responses that might be applied by advanced countries to ameliorate the ageing effect and to continue economic growth into the future. MoDEM decomposes GDP into three components: population, participation and productivity. Each of these in turn is divided into age and sex components and in the case of participation into labour force participation, unemployment, full-time and part-time shares and hours of work. For each of 15 countries, the paper examines the potential impact of variations in future fertility, migration, employment and productivity as means of addressing ageing. Economic approaches often have more potential than demographic approaches.

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Presented in Session 29: Population Aging, Fiscal Impacts, and Economic Growth Around the World