Asia’s silver dividend can offset ageing’s economic toll
Research shows demographic decline hits productivity, not workforce size. Keeping older workers active through technology is the solution
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Population ageing is fast becoming a global phenomenon. Even regions currently enjoying youthful demographics will eventually undergo demographic transition – and this is increasingly relevant for developing countries too.
Some Southeast Asian economies, Thailand and Vietnam among them, have already reached the intermediate stages of this transition. It has begun even in younger economies such as the Philippines, where the fertility rate has now fallen below replacement level.Conventional wisdom holds that population ageing inevitably leads to labour shortages, which in turn constrain productive capacity. But new research is casting fresh light on this assumption.
AdvertisementTwo key findings stand out. First, the so-called silver dividend – whereby older workers remain in the labour market longer – could mitigate ageing’s drag on economic growth. Second, the adverse effects of ageing arise not from a shrinking labour force per se, but from its detrimental impact on total factor productivity (TFP) growth.
TFP refers to an economy’s ability to generate outputs or income from inputs such as labour and capital; it is higher when a country raises its income without using more inputs, or sustains its income level with fewer.
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