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A Global Demographic Transformation is Upon Us

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A New York Times analysis of worldwide population data released by the United Nations describes a rapidly aging Europe, east Asia and North America and a youthful Africa and parts of Asia. It focuses both on the “opportunity of youth” and the “challenges of aging.”

Opportunity of Youth

In terms of the opportunity of youth, the article describes how over the last half century South Korea, China, Japan and Singapore have benefited from a relatively large working-age population. This has occurred due to a huge drop in birth rates. As a result, these countries had fewer children compared to the number of adults who were born when birth rates were higher. Due to worse health care and living conditions in earlier years, they also had fewer old people.

The 10 countries with the highest proportion of working age adults in their populations in 1990 were Japan, South Korea, Germany, Italy, Russia, the United States, France, China, Thailand and the United Kingdom. All but Russia and Thailand are eight of the 10 countries with the largest economies today. However, today only South Korea and China make the list of the nations with the highest working-age share of the population.

The transformation from high-birth rate to low-birth rate is now occurring in Africa and south Asia. In Kenya, where 50 years ago women had an average of eight children each, today they have just over three. The result is that the 10 countries projected to have the highest proportion of working-age adults in 2050 are South Africa, Myanmar, India, Bangladesh, the Philippines, Pakistan, Kenya, Indonesia, Egypt and Ethiopia. The question is whether they will reap the benefits of being in the demographic sweet spot to the same extent as the east Asian countries. While demography helped them, they also had institutions that supported development.

If the African and south Asian countries who will have the potential of many workers over the coming decades don’t have jobs and education for them, the result can be great social unrest. “If you don’t have employment for those people who are entering the labor force, then it’s no guarantee that the demographic dividend is going to happen,” said Carolina Cardona (as quoted in The New York Times), a health economist at Johns Hopkins University where she works on the Gates Foundation supported Demographic Dividend Initiative.

Challenges of Aging

While the over the past 50 years, Europe, east Asia and the United States benefited from favorable demographics, those same people who were in the workforce our now aging out of it. According to the U.N. projections, by 2050 South Korea’s working age population will drop by a third, Japan’s, Italy’s and Spain’s by more than a quarter. China is projected to have a whopping 200 million fewer workers in 2050 than it has today. These numbers are quite definite since all but a few people of working age and older in 2050 are alive today.

Not only will these countries have fewer workers proportionately, but they will have a high proportion of older people who will need financial and often physical support. The article points out that the demographic transformation from high to low birth rates which took place over as long as a century in Europe and North America happened over decades in east Asia. As a result, they will have to make an abrupt adjustment. Many of the east Asian countries are also still much poorer than the countries in Europe and east Asia and have less robust social security and pension systems.

The 11 oldest countries in 2050 are projected to be South Korea, Japan, Italy, Spain, Taiwan, Greece, Singapore, Slovenia, Thailand, Germany, and China. While facing its own aging challenges, as we’ve discussed before, the United States is relatively better off than most other aging countries due to its somewhat higher fertility rate and a relatively high rate of immigration, though the latter may depend on political developments going forward.

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