Demographic Dividend

I’ve been reading a few things that people recommended on the macroeconomic consequences of demographic shifts. The clearest, most rigorous, and most useful conceptual element I’ve seen is the idea of a “demographic dividend” that relates to the ratio of working to non-working people in your population. If you have tons of kids, you have a low ratio. Then a several decades later you have a situation where those kids are middle-aged and their parents are retired. If the middle-aged people shift to having small families, then you have a very high ratio of workers to non-workers, which is good for growth. But then several decades after that, you might once again have a slow-growth low-ratio situation.

Check out this chart:

This seems to do useful work in explaining the current East Asian boom.

On the other hand, it also implies that, contrary to conventional wisdom, the demographic situation in Europe has generally been more favorable to growth than it has in the United States and that this trend should continue into the 2030s.


Somewhat relatedly, this post by Claus Vistesen makes the case that Japan’s population aging/decline dynamic is inextricably linked to the export-orientation of the economy. This makes a lot of sense to me.