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Population Aging: Economic and Social Consequences
Population Aging: Economic and Social Consequences Jacques Le´gare´, Université de Montréal, Montréal, QC, Canada Ó 2015 Elsevier Ltd. All rights reserved.
Abstract Demographic aging is a modern phenomenon: never before has there been a society that was so old, although within societies there were some old individuals. As of now, all societies will become old because they control both their mortality and fertility; they will be characterized by demographic transition and as a result, demographic aging. This change inevitably brings demographic and socioeconomic consequences. To be properly managed, they must be empirically determined and rationally studied, because the aging of populations is one of the great achievements in the history of civilization. Increasing numbers of people are reaching retirement and old age, and their relative weight in the population will be greater than ever before. The costs of health care and pensions will increase and their method of financing is a concern to many. In countries that do not have social security systems, innovative systems will have to be established, and in those that do, in-depth reforms will be required to insure that beyond traditional solidarity, we secure for the coming generations a degree of intergenerational equity.
The notion of aging is quite natural for human beings: from the age of reason, we understand that with the passage of time, every living thing ages and finally dies. Young children experience this with their goldfish or dog, adults with their parents, and old people with their friends. By analogy, we apply the notion of aging even to nonliving things: for example, as a car deteriorates, we say that it is getting old and eventually we relegate it to the scrap lot. Although a good wine may improve with age, in the end it becomes undrinkable. From the individual, the notion of aging is extended to the group formed by the individuals: thus, we speak of an aging fleet of cars or an aging population, meaning that the average length of life of the entire group of these individual units changes with the passage of time (see Ecology of Aging). However, unlike the case for the individuals making up the group, the group itself is able not to age, or even to get younger. This is the case for human populations. For them, the aging process is strictly structural, not biological. The decay generally associated with the aging of individuals should not be assumed to apply to aging populations.
Population Aging: A Modern Demographic Phenomenon A population changes through the interaction of the fertility, mortality, and migration of its members. In recent centuries, we have witnessed remarkable changes in human fertility and mortality, which, uncontrolled since time immemorial, had always been high. In the past, there was a ‘natural’ fertility and mortality, and population numbers throughout the world were relatively low. Eventually, people found ways to reduce first mortality and then fertility, after a certain time lag. In theoretical terms, this historical process is known as the demographic transition (Chesnais, 1992). During this process, the population grows at a higher or lower rate, depending on the extent of this time lag. At the end of the process, according to the theory, both fertility and mortality are low and the population stops growing. But an inescapable law of demography
540
says that a population either grows or it ages (Coale, 1987). As all populations around the world have reduced or stopped their growth (United Nations, 2011), they are all bound to age. In some countries the fertility level is well below the replacement level, and thus their populations will decrease unless they experience in-migration, a possibility not foreseen by classical transition theory. There are several ways of measuring the aging of a population. Instinctively, one could say that a population is aging if the average – or median – age of its members as a group increases over time. Alternatively, one could look for an increase in the proportion of old people in the population. But at what age does a person become old? We do not want to enter into a debate over the exact threshold of old age or retirement, but for purposes of illustration we will use the percentage aged 60 and over in the population (see Age Stratification; Age Structure). To avoid delving too far into the past, we will restrict our discussion of demographic aging to the period from 1950 to 2100. During the twentieth century, the growth in the number of people aged 60 and over in different parts of the world was relatively small, and there were roughly as many people old (according to this definition) in more developed regions as in less developed regions. However, from now until 2100, this number will grow spectacularly, mainly because of the increase in less developed regions (Table 1). But if we look at the proportion of people aged 60 and over in the population as a measure of demographic aging between 1950 and 2100 (Table 1), we see that the situation differs greatly from one continent to another. Africa will remain young while the more developed regions as a whole will have a bit less than onethird of their populations in the ‘old’ category. Asia will age at an increasing rate: in 2100, it will have near 1500 million people aged 60 and over. This is half of the world’s elderly population. In the industrialized regions, the process of population aging is relatively slow, but in developing regions it will be more intense and rapid. This can be clearly shown by a comparison of Canada and the BRICS countries, a group of emerging economies formed by Brazil, Russia, India, China,
International Encyclopedia of the Social & Behavioral Sciences, 2nd edition, Volume 18
http://dx.doi.org/10.1016/B978-0-08-097086-8.34041-7
Population Aging: Economic and Social Consequences
Table 1
541
Population aged 60 and over, 1950–2100
Regions
1950
1975
2000
2025
2050
2075
2100
348 177 161 851 186 325 17 385 168 940
609 286 231 926 377 360 33 549 343 811
1 198 458 350 298 848 160 72 353 775 806
2 031 337 418 326 1 613 011 181 568 1 431 442
2 538 904 412 719 2 126 186 361 437 1 764 749
2 831 027 432 831 2 398 196 561 814 1 836 381
119 410
243 995
557 613
1 161 352
1 716 404
2 068 354
Africa 12 226 20 873 Latin America and the Caribbean 9392 21 057 Northern America 21 288 35 310 Asia 93 643 157 176 Europe 66 338 111 390 Oceania 1417 2371 (b) Population aged 60 and over, percentage of total population World total 8.1 8.5 More developed regionsa 11.7 15.5 6.3 6.1 Less developed regionsa Least developed countriesa 5.2 5.0 Less developed regions, excluding 6.5 6.3 least developed countries Less developed regions, excluding China 5.8 5.7
41 963 43 558 50 985 320 725 147 880 4175
90 828 101 371 95 879 698 549 203 309 8522
215 249 187 869 120 797 1 252 588 241 828 13 006
434 686 237 917 142 732 1 486 421 220 389 16 759
716 398 236 282 165 564 1 473 324 219 435 20 023
10.0 19.5 7.6 5.1 8.0
15.0 27.2 12.6 6.3 13.9
21.8 31.9 20.2 10.5 22.8
25.6 31.5 24.7 15.9 27.9
28.0 32.4 27.3 20.9 30.1
6.7
10.5
17.4
22.9
26.4
5.2 8.4 16.3 8.6 20.3 13.4
6.4 14.9 24.7 14.8 27.3 19.1
9.8 25.0 27.0 24.4 33.6 23.5
14.7 32.2 28.9 29.9 32.3 27.0
20.0 34.4 31.5 32.1 32.5 30.4
(a) Population aged 60 and over, in thousands World total 204 304 More developed regionsa 95 245 109 059 Less developed regionsa Least developed countriesa 10 267 Less developed regions, excluding 98 792 least developed countries Less developed regions, excluding China 67 114
Africa Latin America and the Caribbean Northern America Asia Europe Oceania
5.3 5.6 12.4 6.7 12.1 11.2
5.0 6.5 14.6 6.6 16.5 11.0
a
More developed regions comprise Europe, Northern America, Australia/New Zealand, and Japan. Less developed regions comprise all regions of Africa, Asia (excluding Japan), Latin America, and the Caribbean plus Melanesia, Micronesia, and Polynesia. Least developed countries are 48 countries, 33 in Africa, 9 in Asia, 5 in Oceania, plus one in Latin America and the Caribbean. Source: United Nations Department of Economic and Social Affairs, 2011. World Population Prospects: The 2010 Revision. United Nations, New York.
and South Africa (Laïdi, 2012) (Figure 1). In 2100, BRICS countries will be world leaders in demographic aging with almost 930 million people aged 60 and over. This is more than 30% of their total population. In the face of globalization, the changes occurring over this century will give rise to a number of socioeconomic issues that would not have made themselves felt if population aging affected only the currently industrialized countries. There will be both demographic and economic and social consequences for our societies.
Demographic Consequences
Figure 1 Population aging in Canada and BRICS countries, 1950– 2100. Source: United Nations Department of Economic and Social Affairs, 2011. World Population Prospects: The 2010 Revision. United Nations, New York; Laïdi, Z., 2012. BRICS: sovereignty power and weakness. International Politics 49, 614–632.
As is easily demonstrated, in the early stages of the demographic transition aging is much more the result of a decline in fertility than in mortality. When mortality declines from a high level, it is primarily early deaths that are eliminated, in particular deaths of children and young adults. The result is a younger (not older) population, as was seen in Africa between 1950 and 1975 (Table 1). But when life expectancy is already very high, as is the case now in industrialized countries, mortality becomes an
542
Population Aging: Economic and Social Consequences
important factor in demographic aging. If mortality is low and decreasing, we get a double effect. First, increasing numbers of people reach the old age threshold – because of lowered mortality before that age. Second, people live for increasing lengths of time beyond this threshold – owing to a continued decline of mortality at old age (Shumanthy et al., 2012). The main consequence of this development is that old people no longer form a homogeneous group: we now have the young old, who generally are in quite good health, and the oldest old, who generally are more dependent for income security and health. Thus, we have moved from having three main lifecycle stages to four. There is a new third age that extends from retirement to the oldest-old stage. This is an entity that never existed before in human history (Laslett, 1989). Another important feature in mortality changes in many societies has been an increased mortality gap between men and women. Even if attenuated in the present century (Avdeev et al., 2011), very frequently old people in these societies are and will continue to be primarily old women. Like any other population, the elderly population is subject to a process of incessant inward and outward movement of cohorts. In most industrialized countries the incoming generations will be clearly differentiated with respect to their numbers and their characteristics. The generations now entering retirement are the baby boomers born after World War II. They will be followed by the baby busters, who are far less numerous. These generations, particularly the women, will have characteristics very different from those of today’s old people (Légaré and Ménard, 2007), especially in terms of education. The changes in the age structure of our societies will cause major realignments that affect not only the elderly but the entire population. In terms of health and financial security, will old people be more independent or more dependent than before? The increasing presence of very old people tends to suggest dependence, while the characteristics of the future younger elderly appear to suggest greater autonomy. Will the younger adults, who are far less numerous than the baby boomers, be willing to pay for a golden twilight for tomorrow’s seniors? We now turn to these questions in the following sections.
Economic Consequences The Aging Process and the Working-Age Population At the beginning of the population aging process, a standard age pyramid shows the population cohorts by age increasingly reduced by mortality. As the process gradually proceeds, positive impacts on the working-age population appear. The decline in mortality eliminates early deaths and increases population numbers. Then, as the effects of fertility decline come to the fore, cohort size is increasingly reduced. When mortality improvements lead to significant reductions in oldage deaths, the members of the retired cohorts become as numerous as, and sometimes more numerous than, those of working-age cohorts. The pyramid changes into a top and finally into a cylinder. This means that at the end of the aging process, all generations are of approximately the same size except for the very old. This process is reflected in the variations of what are commonly called the dependency ratios, one of
which is the ratio of people aged 65 and over to those aged 19–64. Unfortunately, the use of the adjective ‘dependency’ may unduly give an impression of economic dependence. These indicators are merely indices of the age structure and it would be more appropriate to speak of demographic dependency ratios (see Age Structure). In studies of aging we frequently find the members of the working-age population equated to actual workers. While in the past this was true for men when their labor force participation rate was close to 100%, it is now less so, in particular for women. To assess the economic impacts of aging and our ways of dealing with them, we needed to take into account not only population numbers, but perhaps more importantly, labor force participation rates and worker productivity (OECD, 1998). If the shift from agricultural to industrial societies had great impacts on the world of work, the shift to aging postindustrial societies will have an equally great impact. This is particularly true for the change in the rate of labor force participation by women and by older workers. The radical decline in fertility and otherwise changing family arrangements has freed women from a myriad of family duties and made them available for increased participation in the paid labor market. The women’s liberation movement also contributed to changes in attitudes and women are becoming increasingly independent, not only at working age, but also, and perhaps especially, during retirement. One of the corollaries – and achievements – of the development of industrial societies has been the right to retirement and associated pensions. In the second part of the twentieth century, we have witnessed a decline in the labor force participation rate of older workers, along with a systematic decline in the age of leaving the labor market. This ever-earlier retirement from the labor market has now been reversed. As life expectancy increases, especially at old age, and as the time spent taking education is extended, the life segment in retirement is growing longer and the segment in which one works is getting shorter. When a large and growing share of the costs of social security, including pensions and health insurance, is borne by those who work, some adjustments must be considered. It is not possible to maintain contribution and benefit levels and, simultaneously, to bring down, or even maintain, the age of access to benefits. There is a need for greater flexibility, both in wages and responsibilities for the population approaching retirement. For older workers, one should consider a gradual progression from wages to pension income, perhaps following a normal rather than S-shaped curve. This may call for a change in attitudes, not only among the workers themselves but also among employers and trade unions. Solidarity among generations presupposes a minimum of equity between groups. When social security programs in the industrialized countries were reorganized after World War II, both the population and the economy were growing: the populations were young. Pay-as-you-go financing did not create any visible problems, and it eliminated some perverse effects of funded programs, many of which had collapsed in Europe during the Depression and the war. In aging societies – particularly those which have experienced a large baby boom followed by a baby bust – a hybrid system combining pay-as-
Population Aging: Economic and Social Consequences
you-go and funded elements is likely to be more equitable across generations. At present, the labor market is undergoing major changes. Workers will no longer hold full-time jobs for life the way they did previously in industrial societies. New workers will enter the labor market later in life. They will hold part-time jobs with varying employers, more often and possibly for a significant part of their working life, or be self-employed. From time to time they will have periods of unemployment or of retraining. Moreover, such patterns, which formerly applied mainly to women, will now apply to men as well. Consequently, retirement systems based on previous labor market participation and involving individual employers are subject to in-depth revision. In addition, one should take the value of unpaid work into account. In particular, work performed to raise children or to care for aging parents needs to be recognized.
An Aging Society: A Burden? Because population aging is equated to individual aging all too often, one tends to highlight problems for aging societies, in particular problems related to the costs of health and pension programs for the elderly. On this subject some issues need to be clarified and some myths should be dispelled. First, the situation of old people in most countries has improved greatly largely as a result of post–World War II social programs. There have even been hard economic times when their situation has deteriorated less than that of younger people. Second, health and pension costs will certainly continue to increase in aging societies, but at what rate will this happen? With regard to health Zweifel et al. (2004) have shown that increases in medical costs are more closely linked to the number of old-age deaths than to the size of the elderly population, and the number of old-age deaths is increasing much less rapidly than the size of the elderly population (Légaré et al., 2006). The same is not true for pensions, whose costs are linked directly to the number of old people. However, one should not forget that retired people also pay taxes, both on their income and on consumption. As people age, their material needs (other than those related to health) decrease, however, and this might be reflected in their pension requirements. Third, although incomes are on average lower at old age than at other ages, the elderly often hold a large share of the collective wealth through their assets, in particular by owning of their dwellings (see Intergenerational Solidarity). In brief, far from being an impediment to economic development, elderly people in aging societies can sometimes serve as an important actor if not the engine of such development (Dirn and Mendras, 1984).
Social Consequences Increasingly, the group of old people is not homogeneous with regard to health status and wealth, and this has numerous consequences for their life-style. First, let us recall that to a large extent the world of the elderly is a world of old widows. This feature has become increasingly prominent over the twentieth century, as excess male mortality has grown while the
543
difference in age at marriage has remained stable. In addition, the twentieth century has been characterized by the quest for greater independence at all ages. Old people in industrialized countries prefer to live alone if they do not live with their spouse, particularly when they are in good health. But this choice does not necessarily imply isolation. Alternatively, living together with people other than one’s late spouse may become a strategy for dealing with financial or health problems, perhaps as a stage that precedes institutionalization. Multigenerational households are much more common in less industrialized countries, mainly for cultural and economic reasons. We can only wonder what will happen in the future in these societies. In a context of rapid urbanization and scarcity of dwellings, there will be an acceleration in aging following the sharp decline in fertility. With its one-child policy, China is a particularly poignant case. Demographic constraints may become apparent as daughters and daughters-in-law become increasingly less numerous and less often available to take care of old parents. In societies with low mortality (or equivalently, long life expectancy), early deaths are reduced to a minimum and are usually related to lifestyle rather than caused by exogenous diseases. This produces a great deal of interest in the population’s health status, and public health policy objectives may concentrate on insuring quality of life for the aging population more than on preventing early adult deaths. The focus moves from mortality to morbidity, from life expectancy to healthylife expectancy (Robine and Cambois, 2013). By means such as surveys on seniors’ functional capacities, it is possible to identify impediments to independent existence and to develop policies that will minimize the adverse effects of biological and social aging. Such policies are centered on support networks (see Age Policy). Assistance provided to old people may come from professionals hired by the state, the community, or private enterprise. Alternatively, they may be offered by the family, friends, or neighbors. The expanding need for services provided through such formal and informal networks is an increasing source of concern. For the informal networks, the many changes that have occurred in family structures leave future prospects unclear; for the formal networks, it is mainly the cost that worries public policy makers. In this picture one should not forget that seniors are not only receivers of assistance, but very often also providers.
Conclusion Some believe that the twenty-first century will see the emergence of intergenerational conflicts similar to the gender conflicts of the twentieth century. Major transformations of the population age structure have altered the ratio between the retired and the working population and will continue to do so. In addition to solidarity among generations, any reforms to social security programs taking account of the new demographic reality need to aim to promote intergenerational equity. For this purpose, we have seen the development of new measurement techniques, known as demographic accounting (Auerbach et al., 1999). Even if not yet often applied, by making use of individual-level data and by making adequate
544
Population Aging: Economic and Social Consequences
long-term projections we will be able to benefit from these new methodologies. In conclusion, we observe that for centuries, life in all its forms was regulated by nature. Gradually, human societies became able to control their destiny by largely controlling their mortality and fertility. This resulted in great changes for the societies, and in particular it accelerated their aging. The fact that most now live to old age and that our populations progressively age can only be regarded as great cultural progress (Légaré, 2005). However, like all progress, individual and societal aging must be managed skillfully. Moreover, we are in the midst of a process of shifting control from society to the citizen (Légaré and Marcil-Gratton, 1990). Decisions concerning demographic behavior, like whether or not to get married, whether to have children, how many and when, whether to leave an existing marriage and contract another one, and so on, are now made on the individual level more than ever before. In a world where centenarians will become rather common, people will doubtless also want to have a say on the timing of their departure from life (Légaré and MarcilGratton, 1990).
See also: Adulthood: Dependency and Autonomy; Age Policy; Age Stratification; Age Structure; Age, Sociology of; Aging and Health in Old Age; Aging, Theories of; Cognitive Aging; Motivation: Life Course and Sociological Perspectives; Old Age and Centenarians: The Human ‘Warranty Period’; Retirement and Encore Adulthood: The New Later Life Course.
Bibliography Auerbach, A.J., Kotlikoff, L.J., Leibfritz, W. (Eds.), 1999. Generational Accounting around the World. University of Chicago Press, Chicago. Avdeev, A., Eremenko, T., Festy, P., Gaymu, J., Le Bouteillec, N., Springer, S., 2011. Populations and demographic trends of European countries, 1980–2010. Population-E 66 (1), 9–130. Chesnais, J.C., 1992. The Demographic Transition: Stages, Patterns, and Economic Implications. Oxford University Press, New York. Cliquet, R., Nizamuddin, M. (Eds.), 1999. Population Ageing. Challenges for Policies and Programmes in Developed and Developing Countries. United Nations Population Fund, New York. Coale, A., 1987. How a population ages or grows younger. In: Menard, S.W., Moen, E.W. (Eds.), Perspectives on Population: An Introduction to Concepts and Issues. Oxford University Press, New York.
Dirn, L., Mendras, H., September 1984. Le troisième âge animera la société française. Futuribles 80, 3–28. Laïdi, Z., 2012. BRICS: sovereignty power and weakness. International Politics 49, 614–632. Laslett, P., 1989. A Fresh Map of Life. The Emergence of the Third Age. Weidenfeld and Nicolson, London. Légaré, J., Marcil-Gratton, N., 1990. Individual programming of life events: a challenge for demographers in the 21st century. Annals of the New York Academy of Sciences 610, 98–105. Légaré, J., 2005. Economic, social and cultural consequences of the aging of the population. In: Casseli, G., Vallin, J., Wunsch, G. (Eds.), Demography: Analysis and Synthesis. A Treatise in Population Studies, vol. 3. Academic Press, New York, pp. 327–336 (Chapter 82). Légaré, J., Bourbeau, R., Desjardins, B., Deblois, C., 2006. Variation in cohort size and lower mortality in the elderly: implications for pay-as-you-go healthcare systems. In: Yi, Z., et al. (Eds.), Longer Life and Healthy Aging. Springer, Heidelberg, pp. 305–318. Légaré, J., Ménard, P.O., 2007. Generations succeed but do not resemble each other. The X, Y and baby-boomers generations in Quebec. Horizons 9 (3), 9–14. Martin, L.G., Preston, S.H. (Eds.), 1994. Demography of Ageing. National Academy Press, Washington, DC. Mathers, C., Boerma, T., Ma Fat, D., 2008. The Global Burden of Disease: 2004 Update. World Health Organization, Geneva. Organisation for Economic Co-operation and Development (OECD), 1988. Ageing Populations. The Social Policy Implications. Organisation for Economic Co-operation and Development (OECD), Paris. Organisation for Economic Co-operation and Development (OECD), 1998. Maintaining Prosperity in an Ageing Society. Organisation for Economic Co-operation and Development (OECD), Paris. Organisation for Economic Co-operation and Development (OECD), 2000. Reforms for an Ageing Society. Organisation for Economic Co-operation and Development (OECD), Paris. Robine, J.M., Cambois, E., 2013. Healthy life expectancy in Europe. Population & Societies 499. Shumanthy, R., Bourbeau, R., Légaré, J., September 2012. Mortality in Canada for cohorts 1921–1981. In: European Association for Population Studies (EAPS). Working Group on Health, Tallinn, Estonia, pp. 5–7. Suzman, R., Willis, D.P., Manton, K.G., 1992. The Oldest Old. Oxford University Press, New York. United Nations Department of Economic and Social Affairs, 1956. The Ageing of Populations and Its Economic and Social Implications. United Nations, New York. United Nations Department of Economic and Social Affairs, 1988. Economic and Social Implications of Population Ageing. United Nations, New York. United Nations Department of Economic and Social Affairs, 2011. World Population Prospects: The 2010 Revision. United Nations, New York. World Bank, 1994. Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth. Oxford University Press, New York. Zweifel, P., Felder, S., Werblow, 2004. Population ageing and health care expenditure: new evidence on the “Red Herring”. The Geneva Papers on Risk and Insurance 29 (4), 652–666.
Abstract Demographic aging is a modern phenomenon: never before has there been a society that was so old, although within societies there were some old individuals. As of now, all societies will become old because they control both their mortality and fertility; they will be characterized by demographic transition and as a result, demographic aging. This change inevitably brings demographic and socioeconomic consequences. To be properly managed, they must be empirically determined and rationally studied, because the aging of populations is one of the great achievements in the history of civilization. Increasing numbers of people are reaching retirement and old age, and their relative weight in the population will be greater than ever before. The costs of health care and pensions will increase and their method of financing is a concern to many. In countries that do not have social security systems, innovative systems will have to be established, and in those that do, in-depth reforms will be required to insure that beyond traditional solidarity, we secure for the coming generations a degree of intergenerational equity.
The notion of aging is quite natural for human beings: from the age of reason, we understand that with the passage of time, every living thing ages and finally dies. Young children experience this with their goldfish or dog, adults with their parents, and old people with their friends. By analogy, we apply the notion of aging even to nonliving things: for example, as a car deteriorates, we say that it is getting old and eventually we relegate it to the scrap lot. Although a good wine may improve with age, in the end it becomes undrinkable. From the individual, the notion of aging is extended to the group formed by the individuals: thus, we speak of an aging fleet of cars or an aging population, meaning that the average length of life of the entire group of these individual units changes with the passage of time (see Ecology of Aging). However, unlike the case for the individuals making up the group, the group itself is able not to age, or even to get younger. This is the case for human populations. For them, the aging process is strictly structural, not biological. The decay generally associated with the aging of individuals should not be assumed to apply to aging populations.
Population Aging: A Modern Demographic Phenomenon A population changes through the interaction of the fertility, mortality, and migration of its members. In recent centuries, we have witnessed remarkable changes in human fertility and mortality, which, uncontrolled since time immemorial, had always been high. In the past, there was a ‘natural’ fertility and mortality, and population numbers throughout the world were relatively low. Eventually, people found ways to reduce first mortality and then fertility, after a certain time lag. In theoretical terms, this historical process is known as the demographic transition (Chesnais, 1992). During this process, the population grows at a higher or lower rate, depending on the extent of this time lag. At the end of the process, according to the theory, both fertility and mortality are low and the population stops growing. But an inescapable law of demography
540
says that a population either grows or it ages (Coale, 1987). As all populations around the world have reduced or stopped their growth (United Nations, 2011), they are all bound to age. In some countries the fertility level is well below the replacement level, and thus their populations will decrease unless they experience in-migration, a possibility not foreseen by classical transition theory. There are several ways of measuring the aging of a population. Instinctively, one could say that a population is aging if the average – or median – age of its members as a group increases over time. Alternatively, one could look for an increase in the proportion of old people in the population. But at what age does a person become old? We do not want to enter into a debate over the exact threshold of old age or retirement, but for purposes of illustration we will use the percentage aged 60 and over in the population (see Age Stratification; Age Structure). To avoid delving too far into the past, we will restrict our discussion of demographic aging to the period from 1950 to 2100. During the twentieth century, the growth in the number of people aged 60 and over in different parts of the world was relatively small, and there were roughly as many people old (according to this definition) in more developed regions as in less developed regions. However, from now until 2100, this number will grow spectacularly, mainly because of the increase in less developed regions (Table 1). But if we look at the proportion of people aged 60 and over in the population as a measure of demographic aging between 1950 and 2100 (Table 1), we see that the situation differs greatly from one continent to another. Africa will remain young while the more developed regions as a whole will have a bit less than onethird of their populations in the ‘old’ category. Asia will age at an increasing rate: in 2100, it will have near 1500 million people aged 60 and over. This is half of the world’s elderly population. In the industrialized regions, the process of population aging is relatively slow, but in developing regions it will be more intense and rapid. This can be clearly shown by a comparison of Canada and the BRICS countries, a group of emerging economies formed by Brazil, Russia, India, China,
International Encyclopedia of the Social & Behavioral Sciences, 2nd edition, Volume 18
http://dx.doi.org/10.1016/B978-0-08-097086-8.34041-7
Population Aging: Economic and Social Consequences
Table 1
541
Population aged 60 and over, 1950–2100
Regions
1950
1975
2000
2025
2050
2075
2100
348 177 161 851 186 325 17 385 168 940
609 286 231 926 377 360 33 549 343 811
1 198 458 350 298 848 160 72 353 775 806
2 031 337 418 326 1 613 011 181 568 1 431 442
2 538 904 412 719 2 126 186 361 437 1 764 749
2 831 027 432 831 2 398 196 561 814 1 836 381
119 410
243 995
557 613
1 161 352
1 716 404
2 068 354
Africa 12 226 20 873 Latin America and the Caribbean 9392 21 057 Northern America 21 288 35 310 Asia 93 643 157 176 Europe 66 338 111 390 Oceania 1417 2371 (b) Population aged 60 and over, percentage of total population World total 8.1 8.5 More developed regionsa 11.7 15.5 6.3 6.1 Less developed regionsa Least developed countriesa 5.2 5.0 Less developed regions, excluding 6.5 6.3 least developed countries Less developed regions, excluding China 5.8 5.7
41 963 43 558 50 985 320 725 147 880 4175
90 828 101 371 95 879 698 549 203 309 8522
215 249 187 869 120 797 1 252 588 241 828 13 006
434 686 237 917 142 732 1 486 421 220 389 16 759
716 398 236 282 165 564 1 473 324 219 435 20 023
10.0 19.5 7.6 5.1 8.0
15.0 27.2 12.6 6.3 13.9
21.8 31.9 20.2 10.5 22.8
25.6 31.5 24.7 15.9 27.9
28.0 32.4 27.3 20.9 30.1
6.7
10.5
17.4
22.9
26.4
5.2 8.4 16.3 8.6 20.3 13.4
6.4 14.9 24.7 14.8 27.3 19.1
9.8 25.0 27.0 24.4 33.6 23.5
14.7 32.2 28.9 29.9 32.3 27.0
20.0 34.4 31.5 32.1 32.5 30.4
(a) Population aged 60 and over, in thousands World total 204 304 More developed regionsa 95 245 109 059 Less developed regionsa Least developed countriesa 10 267 Less developed regions, excluding 98 792 least developed countries Less developed regions, excluding China 67 114
Africa Latin America and the Caribbean Northern America Asia Europe Oceania
5.3 5.6 12.4 6.7 12.1 11.2
5.0 6.5 14.6 6.6 16.5 11.0
a
More developed regions comprise Europe, Northern America, Australia/New Zealand, and Japan. Less developed regions comprise all regions of Africa, Asia (excluding Japan), Latin America, and the Caribbean plus Melanesia, Micronesia, and Polynesia. Least developed countries are 48 countries, 33 in Africa, 9 in Asia, 5 in Oceania, plus one in Latin America and the Caribbean. Source: United Nations Department of Economic and Social Affairs, 2011. World Population Prospects: The 2010 Revision. United Nations, New York.
and South Africa (Laïdi, 2012) (Figure 1). In 2100, BRICS countries will be world leaders in demographic aging with almost 930 million people aged 60 and over. This is more than 30% of their total population. In the face of globalization, the changes occurring over this century will give rise to a number of socioeconomic issues that would not have made themselves felt if population aging affected only the currently industrialized countries. There will be both demographic and economic and social consequences for our societies.
Demographic Consequences
Figure 1 Population aging in Canada and BRICS countries, 1950– 2100. Source: United Nations Department of Economic and Social Affairs, 2011. World Population Prospects: The 2010 Revision. United Nations, New York; Laïdi, Z., 2012. BRICS: sovereignty power and weakness. International Politics 49, 614–632.
As is easily demonstrated, in the early stages of the demographic transition aging is much more the result of a decline in fertility than in mortality. When mortality declines from a high level, it is primarily early deaths that are eliminated, in particular deaths of children and young adults. The result is a younger (not older) population, as was seen in Africa between 1950 and 1975 (Table 1). But when life expectancy is already very high, as is the case now in industrialized countries, mortality becomes an
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important factor in demographic aging. If mortality is low and decreasing, we get a double effect. First, increasing numbers of people reach the old age threshold – because of lowered mortality before that age. Second, people live for increasing lengths of time beyond this threshold – owing to a continued decline of mortality at old age (Shumanthy et al., 2012). The main consequence of this development is that old people no longer form a homogeneous group: we now have the young old, who generally are in quite good health, and the oldest old, who generally are more dependent for income security and health. Thus, we have moved from having three main lifecycle stages to four. There is a new third age that extends from retirement to the oldest-old stage. This is an entity that never existed before in human history (Laslett, 1989). Another important feature in mortality changes in many societies has been an increased mortality gap between men and women. Even if attenuated in the present century (Avdeev et al., 2011), very frequently old people in these societies are and will continue to be primarily old women. Like any other population, the elderly population is subject to a process of incessant inward and outward movement of cohorts. In most industrialized countries the incoming generations will be clearly differentiated with respect to their numbers and their characteristics. The generations now entering retirement are the baby boomers born after World War II. They will be followed by the baby busters, who are far less numerous. These generations, particularly the women, will have characteristics very different from those of today’s old people (Légaré and Ménard, 2007), especially in terms of education. The changes in the age structure of our societies will cause major realignments that affect not only the elderly but the entire population. In terms of health and financial security, will old people be more independent or more dependent than before? The increasing presence of very old people tends to suggest dependence, while the characteristics of the future younger elderly appear to suggest greater autonomy. Will the younger adults, who are far less numerous than the baby boomers, be willing to pay for a golden twilight for tomorrow’s seniors? We now turn to these questions in the following sections.
Economic Consequences The Aging Process and the Working-Age Population At the beginning of the population aging process, a standard age pyramid shows the population cohorts by age increasingly reduced by mortality. As the process gradually proceeds, positive impacts on the working-age population appear. The decline in mortality eliminates early deaths and increases population numbers. Then, as the effects of fertility decline come to the fore, cohort size is increasingly reduced. When mortality improvements lead to significant reductions in oldage deaths, the members of the retired cohorts become as numerous as, and sometimes more numerous than, those of working-age cohorts. The pyramid changes into a top and finally into a cylinder. This means that at the end of the aging process, all generations are of approximately the same size except for the very old. This process is reflected in the variations of what are commonly called the dependency ratios, one of
which is the ratio of people aged 65 and over to those aged 19–64. Unfortunately, the use of the adjective ‘dependency’ may unduly give an impression of economic dependence. These indicators are merely indices of the age structure and it would be more appropriate to speak of demographic dependency ratios (see Age Structure). In studies of aging we frequently find the members of the working-age population equated to actual workers. While in the past this was true for men when their labor force participation rate was close to 100%, it is now less so, in particular for women. To assess the economic impacts of aging and our ways of dealing with them, we needed to take into account not only population numbers, but perhaps more importantly, labor force participation rates and worker productivity (OECD, 1998). If the shift from agricultural to industrial societies had great impacts on the world of work, the shift to aging postindustrial societies will have an equally great impact. This is particularly true for the change in the rate of labor force participation by women and by older workers. The radical decline in fertility and otherwise changing family arrangements has freed women from a myriad of family duties and made them available for increased participation in the paid labor market. The women’s liberation movement also contributed to changes in attitudes and women are becoming increasingly independent, not only at working age, but also, and perhaps especially, during retirement. One of the corollaries – and achievements – of the development of industrial societies has been the right to retirement and associated pensions. In the second part of the twentieth century, we have witnessed a decline in the labor force participation rate of older workers, along with a systematic decline in the age of leaving the labor market. This ever-earlier retirement from the labor market has now been reversed. As life expectancy increases, especially at old age, and as the time spent taking education is extended, the life segment in retirement is growing longer and the segment in which one works is getting shorter. When a large and growing share of the costs of social security, including pensions and health insurance, is borne by those who work, some adjustments must be considered. It is not possible to maintain contribution and benefit levels and, simultaneously, to bring down, or even maintain, the age of access to benefits. There is a need for greater flexibility, both in wages and responsibilities for the population approaching retirement. For older workers, one should consider a gradual progression from wages to pension income, perhaps following a normal rather than S-shaped curve. This may call for a change in attitudes, not only among the workers themselves but also among employers and trade unions. Solidarity among generations presupposes a minimum of equity between groups. When social security programs in the industrialized countries were reorganized after World War II, both the population and the economy were growing: the populations were young. Pay-as-you-go financing did not create any visible problems, and it eliminated some perverse effects of funded programs, many of which had collapsed in Europe during the Depression and the war. In aging societies – particularly those which have experienced a large baby boom followed by a baby bust – a hybrid system combining pay-as-
Population Aging: Economic and Social Consequences
you-go and funded elements is likely to be more equitable across generations. At present, the labor market is undergoing major changes. Workers will no longer hold full-time jobs for life the way they did previously in industrial societies. New workers will enter the labor market later in life. They will hold part-time jobs with varying employers, more often and possibly for a significant part of their working life, or be self-employed. From time to time they will have periods of unemployment or of retraining. Moreover, such patterns, which formerly applied mainly to women, will now apply to men as well. Consequently, retirement systems based on previous labor market participation and involving individual employers are subject to in-depth revision. In addition, one should take the value of unpaid work into account. In particular, work performed to raise children or to care for aging parents needs to be recognized.
An Aging Society: A Burden? Because population aging is equated to individual aging all too often, one tends to highlight problems for aging societies, in particular problems related to the costs of health and pension programs for the elderly. On this subject some issues need to be clarified and some myths should be dispelled. First, the situation of old people in most countries has improved greatly largely as a result of post–World War II social programs. There have even been hard economic times when their situation has deteriorated less than that of younger people. Second, health and pension costs will certainly continue to increase in aging societies, but at what rate will this happen? With regard to health Zweifel et al. (2004) have shown that increases in medical costs are more closely linked to the number of old-age deaths than to the size of the elderly population, and the number of old-age deaths is increasing much less rapidly than the size of the elderly population (Légaré et al., 2006). The same is not true for pensions, whose costs are linked directly to the number of old people. However, one should not forget that retired people also pay taxes, both on their income and on consumption. As people age, their material needs (other than those related to health) decrease, however, and this might be reflected in their pension requirements. Third, although incomes are on average lower at old age than at other ages, the elderly often hold a large share of the collective wealth through their assets, in particular by owning of their dwellings (see Intergenerational Solidarity). In brief, far from being an impediment to economic development, elderly people in aging societies can sometimes serve as an important actor if not the engine of such development (Dirn and Mendras, 1984).
Social Consequences Increasingly, the group of old people is not homogeneous with regard to health status and wealth, and this has numerous consequences for their life-style. First, let us recall that to a large extent the world of the elderly is a world of old widows. This feature has become increasingly prominent over the twentieth century, as excess male mortality has grown while the
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difference in age at marriage has remained stable. In addition, the twentieth century has been characterized by the quest for greater independence at all ages. Old people in industrialized countries prefer to live alone if they do not live with their spouse, particularly when they are in good health. But this choice does not necessarily imply isolation. Alternatively, living together with people other than one’s late spouse may become a strategy for dealing with financial or health problems, perhaps as a stage that precedes institutionalization. Multigenerational households are much more common in less industrialized countries, mainly for cultural and economic reasons. We can only wonder what will happen in the future in these societies. In a context of rapid urbanization and scarcity of dwellings, there will be an acceleration in aging following the sharp decline in fertility. With its one-child policy, China is a particularly poignant case. Demographic constraints may become apparent as daughters and daughters-in-law become increasingly less numerous and less often available to take care of old parents. In societies with low mortality (or equivalently, long life expectancy), early deaths are reduced to a minimum and are usually related to lifestyle rather than caused by exogenous diseases. This produces a great deal of interest in the population’s health status, and public health policy objectives may concentrate on insuring quality of life for the aging population more than on preventing early adult deaths. The focus moves from mortality to morbidity, from life expectancy to healthylife expectancy (Robine and Cambois, 2013). By means such as surveys on seniors’ functional capacities, it is possible to identify impediments to independent existence and to develop policies that will minimize the adverse effects of biological and social aging. Such policies are centered on support networks (see Age Policy). Assistance provided to old people may come from professionals hired by the state, the community, or private enterprise. Alternatively, they may be offered by the family, friends, or neighbors. The expanding need for services provided through such formal and informal networks is an increasing source of concern. For the informal networks, the many changes that have occurred in family structures leave future prospects unclear; for the formal networks, it is mainly the cost that worries public policy makers. In this picture one should not forget that seniors are not only receivers of assistance, but very often also providers.
Conclusion Some believe that the twenty-first century will see the emergence of intergenerational conflicts similar to the gender conflicts of the twentieth century. Major transformations of the population age structure have altered the ratio between the retired and the working population and will continue to do so. In addition to solidarity among generations, any reforms to social security programs taking account of the new demographic reality need to aim to promote intergenerational equity. For this purpose, we have seen the development of new measurement techniques, known as demographic accounting (Auerbach et al., 1999). Even if not yet often applied, by making use of individual-level data and by making adequate
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long-term projections we will be able to benefit from these new methodologies. In conclusion, we observe that for centuries, life in all its forms was regulated by nature. Gradually, human societies became able to control their destiny by largely controlling their mortality and fertility. This resulted in great changes for the societies, and in particular it accelerated their aging. The fact that most now live to old age and that our populations progressively age can only be regarded as great cultural progress (Légaré, 2005). However, like all progress, individual and societal aging must be managed skillfully. Moreover, we are in the midst of a process of shifting control from society to the citizen (Légaré and Marcil-Gratton, 1990). Decisions concerning demographic behavior, like whether or not to get married, whether to have children, how many and when, whether to leave an existing marriage and contract another one, and so on, are now made on the individual level more than ever before. In a world where centenarians will become rather common, people will doubtless also want to have a say on the timing of their departure from life (Légaré and MarcilGratton, 1990).
See also: Adulthood: Dependency and Autonomy; Age Policy; Age Stratification; Age Structure; Age, Sociology of; Aging and Health in Old Age; Aging, Theories of; Cognitive Aging; Motivation: Life Course and Sociological Perspectives; Old Age and Centenarians: The Human ‘Warranty Period’; Retirement and Encore Adulthood: The New Later Life Course.
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