The relative price of investment goods exhibits a persistent downward trend across the globe, and demographic shifts featuring population ageing with low fertility constitute a vital structural lens for understanding this stylized fact. Centered on saving and investment as core transmission channels, this paper develops a threeperiod Overlapping Generations model paired with a two-sector heterogeneous production framework. The theoretical derivation elaborates the internal mechanism: low fertility and population ageing lift household savings while curbing corporate investment, disrupting the equilibrium between aggregate capital supply and demand and exerting sustained downward pressure on the relative capital goods price. Empirical evidence drawn from a cross-country panel dataset covering 155 economies from 1970 to 2024 validates that population ageing significantly depresses the investment goods relative price. Subsample heterogeneity tests further confirm that such dampening effects are substantially stronger within developing countries and economies with elevated total factor productivity. This study extends the analytical paradigm for long-run asset pricing. It enriches the demographic-driven explanations for the worldwide decline in investment goods prices, and delivers robust theoretical foundations and empirical evidence to help economies navigate demographic transitions and safeguard financial stability.
Employment rates for workers aged 55–64 increased by an average of 28.5 percentage points across sixteen countries between 2004 and 2019, with Austria, Italy, and the Netherlands experiencing increases larger than their entire 2004 employment rate. We examine what explains these dramatic gains and their substantial heterogeneity across countries and demographic groups.Using harmonized Health and Retirement Study data, we document three key empirical patterns. First, employment increases concentrated among women, healthier individuals, and more educated workers. Second, contrary to prior research, changes in weekly hours per worker are mixed rather than uniformly negative, with gains occurring primarily at the extensive margin. Third, employment growth accelerated during 2013–2019 compared to 2007–2013.While existing research examines longevity and pension reforms as separate channels, we show their interaction is quantitatively important. Longevity improvements amplify pension reform effects: when survival probabilities increase, actuarial adjustments for delayed claiming provide higher benefits collected over longer periods, strengthening work incentives. We formalize this mechanism in a lifecycle framework yielding testable predictions about margins of adjustment and demographic heterogeneity.Countries experiencing both pension reforms and substantial longevity gains show employment increases 15–20 percentage points larger than countries with reforms alone. This interaction helps explain why responses were exceptionally large in some countries, why growth accelerated after 2013, and why effects concentrate among healthier and more educated workers. Our findings suggest pension reform effectiveness depends critically on demographic context. Because effects concentrate at the extensive margin, policies raising retirement ages are more effective than hours flexibility policies.
This study examines the post-exit labor-income and wealth dynamics associated with self-employment exit among older individuals approaching retirement, using longitudinal data from the Korean Longitudinal Study of Aging (2006-2022). The analysis shows that late-life transitions out of self-employment are associated with a significant and persistent reduction in labor income: earnings are 9.7% lower immediately after exit, relative to the pre-exit level, and remain 15.0% below that level six years later. Additional evidence suggests that this pattern partly reflects the loss of occupation-specific human capital. In contrast, the estimated effects on non-housing wealth are statistically insignificant in both the short and long term. Income losses are particularly pronounced among individuals aged 61 or older and those with higher educational attainment, whereas wealth declines are more evident among comparatively younger members of the older population and among the highly educated. These findings underscore the importance of incorporating post-exit income risks into models of late-life career choice and have policy implications for mitigating income disruptions among older self-employed individuals.
One of the key challenges that population aging poses is to ensure that people have an adequate level of saving for old age. The gendered aspect of old-age saving is particularly important given that women tend to contribute less than men to pension programs because of their weaker labor market attachment and lower earnings over their life cycles even though women tend to live longer than men and thus need to save more than men. Using data from the Japanese Panel Survey of Consumers, this paper assesses women’s preparedness for old age by examining whether or not women are saving for old age and how much they are trying to save for that purpose outside of pension programs. It finds that, in comparison to married women, unmarried women are less likely to be saving for old age. The regression results also suggest that women in irregular employment and those with limited financial resources are less prepared for old age. These results raise serious concerns about the possible risk of old-age poverty among unmarried women, particularly those who have worked mainly as irregular workers, if at all, as they are less likely to be covered by the Employees’ Pension Insurance System.
This paper estimates the headcount of catastrophic expenditures and impoverishment among users of home aged 60 and older across 14 European countries and investigates which system-level characteristics mitigate risk of financial hardship. We use a pooled sample of home care service users from the Survey on Health, Ageing and Retirement in Europe (SHARE), for waves 5 and 6, the latest waves for which data on out-of-pocket (OOP) payments are available. Information on system-level characteristics that influence OOP payments were gathered through literature search and expert interviews. Headcounts of catastrophic expenditures and impoverishment were estimated using the 'capacity to pay' method, supplemented by multivariate statistical analyses of vidual and system-level characteristics associated with each outcome. Southern European countries have highest headcount of catastrophic expenditures and impoverishment due to OOP payments for home Catastrophic expenditures are concentrated on the poorest in all countries analysed. Consumption smoothing using accumulated wealth can reduce the risk of catastrophic expenditure but would have more muted effects the risk of impoverishment, due to limited wealth accumulation among individuals most at risk of poverty. Different system-level characteristics or policies have the potential to protect individuals against catastrophic payments and impoverishment. Caps on OOP payments, higher public expenditure on LTC and means tests are associated with lower risk of catastrophic expenditures. Higher public expenditure on LTC and caps on payments reduce the risk of impoverishment due to OOP payments, while means tests only affect poverty intensity.
This study investigates the influence of historical Chinese clan culture on the biological aging of middle-aged and older adults. By combining hand-collected genealogical data with the nationally representative China Health and Retirement Longitudinal Study (CHARLS), we find that stronger clan culture significantly accelerates biological aging. The results are robust to an instrumental variable approach and a series of additional checks. Investigation of potential mechanisms suggests that clan culture operates through increasing risky health behaviors and reinforcing biased health perceptions. These findings underscore the significance of cultural determinants in influencing biological aging.
Population ageing poses major fiscal and macroeconomic challenges for OECD countries. Japan, the most rapidly ageing economy, offers a natural laboratory to study the aggregate effects of extending working lives. Using quarterly data over the period 1975Q1-2022Q4 and structural VAR models, we estimate the dynamic impact of shocks to the labour force participation of older workers. We find that higher participation has no significant effect on GDP per capita but improves the fiscal balance, while also being associated with a decline in average labour productivity. Moreover, the results reveal complementarities across both age and gender: increases in older workers' participation are accompanied by higher participation and employment among younger cohorts, as well as a strong positive participation response among older women following an increase in older men's participation.
This paper examines how older people’s levels of impatience, measured by their discount rate, shaped their financial resilience in the wake of the COVID-19 pandemic. Using survey data on older Americans, we find notable differences in discount rates by race and sex in 2025. Black and White women were less patient than men, while Hispanic women were more patient than Hispanic men. Whites generally had lower discount rates than Blacks. Discount rates, on average, did not change much between 2020 and 2025, although individual responses varied. Multivariate analysis indicates that financial literacy is strongly correlated with increased patience across all groups, with larger estimated associations for Black respondents. The results also show that individuals who were more patient at the start of the pandemic, namely those with lower discount rates, were more financially resilient after the pandemic was over.
This paper provides new global evidence on healthy aging-the extent to which populations age in better health across successive birth cohorts. Using harmonized microdata on individuals aged 50 and above in 41 countries over 2000-22, we document systematic cohort-on-cohort improvements in health outcomes. These gains span physical, cognitive, and mental health, with the strongest improvements observed in cognitive functioning. Despite this broad-based progress, sizable health disparities persist both across and within countries: older adults in emerging markets, and individuals with lower education, lower household wealth, or living in rural areas, continue to experience worse health outcomes when reaching old age. In general, the broad-based evidence on healthy aging across multiple health indicators offers room for optimism: better health outcomes in older individuals could improve labor supply and productivity in old age, and thus offer some relief from demography's drag on growth. However, persistent disparities highlight that health gains are uneven and that policy efforts to promote healthy aging must account for the large differences in health conditions across socioeconomic groups.
France and Japan are known today for their high number of centenarians and supercentenarians, illustrating the great longevity of their populations. Japan is now home to the oldest population in the world, this was long the case of France. But while France is known for the early and slow transitions responsible for the ageing of its population, Japan is known for the late start and rapidity of the demographic transitions that led to its ageing. In this work, the demographic transitions observed in France and Japan since the end of the Second World War are closely compared to draw some socio-economic lessons.
This paper examines how population aging is associated with the long-run productivity of public capital, using prefecture-level panel data from Japan over the period 1981-2020. While a growing literature has examined the demand-side effects of public investment amid demographic change, far less attention has been paid to how aging affects the productivity of public capital. We estimate output elasticities of public capital within a production-function framework, employing panel cointegration techniques-specifically, the Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCEMG) estimators-to obtain consistent estimates in a non-stationary panel setting with crosssectional dependence and heterogeneous regional responses. The results reveal a systematic inverted U-shaped relationship between population aging and the output elasticity of public capital. Public capital productivity is highest in moderately aging regions and substantially lower in both younger and more aged areas. Further analysis suggests that this pattern does not reflect a shift toward unproductive public capital, but rather differences in the efficiency and quality of productive public capital. Sectoral evidence highlights distinct mechanisms in transportation and education infrastructure: excessive network expansion with diminishing returns in highly aged regions, higher construction costs in younger regions, and reduced scale economies and human capital outflows in aging areas. These findings underscore the importance of demographic structure in evaluating the long-run productivity of public capital.
Weighted benefit-cost analysis is receiving increased attention as a method to incorporate concerns about the distribution of policy effects across individuals. Weights are intended to reflect interpersonal differences in the effect of income on wellbeing (the marginal utility of income) and the social value of improving the wellbeing of different individuals. Lacking an objective method for comparing differences or levels of wellbeing between individuals, multiple approaches to estimating how the marginal utility of income depends on income or other factors have been developed, but each of these requires strong assumptions that are not always recognized. This suggests that weights must be chosen judgmentally. Holding income constant, weights are likely to be smaller for older people, due to shorter remaining life expectancy and other factors.
In this paper, we examine the health and retirement outcomes of present-biased individuals who engage in time-inconsistent behavior and fail to follow through on plans to save more, invest more in their health, and reduce unhealthy consumption. For that purpose, we set up a health deficit model with hyperbolic discounting in which longevity and the disutility from work depends on health and the retirement decision depends on health, wealth, and the public pension system. We calibrate the model for Germany and show that inconsistent savings behavior tends to push the retirement age upward, while inconsistent health-related decisions lead to a downward adjustment. Which effect dominates is highly context specific. For example, rich persons and persons with little preference for unhealthy goods are predicted to retire later than planned, poor persons and persons with a strong preference for unhealthy goods retire earlier than planned. However, all individuals die earlier than expected and the loss of life due to inconsistent behavior depends on the strength of present-bias. We explore how the pension system affects the retirement decision and whether it could be designed to nudge individuals to adhere to their retirement plans.
We identify key challenges and develop policy proposals for the UK private pension system, which is increasingly reliant on defined contribution plans. The key challenges are: a significant share of employees, and the vast majority of self-employed workers, are not saving in a private pension; even among savers, low contribution rates mean many are on track for inadequate retirement incomes; and people face complex decumulation decisions, where few take financial advice or buy annuities. We propose: increases in default contribution rates which rise faster as people earn more; a minimum employer pension contribution irrespective of whether employees contribute; facilitation of private pension saving for self-employed workers; and people should be guided towards partial annuitisation later in retirement to provide some longevity insurance.
The aim of this paper is to explore philosophical and ethical perspectives on the value of health, with a particular emphasis on areas that remain underexplored at the intersection of philosophy, health policy and economics. While global health improvements have reduced premature mortality and enhanced wellbeing, productivity, and growth, we still lack a common wellbeing metric that integrates health, longevity, income, and perhaps other dimensions of wellbeing. The paper examines the limitations of applying benefit-cost analysis to health policy evaluation, particularly the practice of monetizing health benefits. While such an approach would, in principle, offer a straightforward and internally consistent framework for comparing policies across different sectors of the economy, it raises substantive conceptual and ethical concerns in the health context. Alternative metrics, such as quality-adjusted life-years (QALYs), emphasize intrinsic health value but often overlook health's instrumental role in enabling education, productivity, civic life, and social functioning. Ultimately, valuing health should include its intrinsic and instrumental value, and health should be recognized as a fundamental component of wellbeing. To address this, frameworks like equivalent income, equivalent health, and WELLBYs are proposed for capturing life years, health-related quality of life, and other wellbeing benefits. The paper argues for adopting a lifetime perspective on improvements and distribution of health and wellbeing in policy evaluations. Although philosophical theories of justice often consider lifetime wellbeing, realworld assessments remain short-term, creating a gap between theory and practice. This calls for methodological innovation, consensus on definitions, and integrated measures to better guide policies toward sustainable social and economic progress.
This paper analyzes the impact of the age structure of the population on the household saving rate using timeseries data for Japan for the 1955-2019 period. It finds that there is a cointegrating relationship between Japan's household saving rate and her dependency ratio (the ratio of the dependent population to the working-age population) and that the latter has a negative and statistically significant impact on the former. This implies that the life-cycle model applies in the case of Japan, that trends over time in the age structure of Japan's population can largely explain trends over time in Japan's household saving rate, that the downward trend in Japan's household saving rate since the mid-1970s can largely be explained by the aging of her population, and that further population aging will lead to further declines in Japan's household saving rate, most likely into negative territory, in future years.
Japan is ahead of most other countries in the global population ageing process. Its working-age population (aged 20–64) peaked in 1998, compared to 2011 in the European Union, while continued growth is expected in the United States until 2070, albeit at a declining pace. In this paper, we analyse employment and productivity developments in Japan since 1998 and examine how Japan differs from other OECD countries in various dimensions potentially related to ageing. Rising employment among women and older workers has lifted Japan’s employment rate to one of the highest levels in the OECD. However, older workers tend to be employed in low-productivity jobs. Despite rising labour shortages, immigration is much lower in Japan than in most other OECD countries. Ageing has led to the adoption of some labour-saving technologies, notably robots. Nevertheless, business dynamism is weak in international comparison and population ageing creates challenges for business succession. Changes in the consumption structure have been modest. Age-related spending contributed significantly to the deterioration of fiscal positions. Overall, even though Japan has been able to cope with ageing relatively well, its economic developments over the past decades illustrate the challenges of enhancing job quality at the same time as raising employment rates, sustaining innovation and preserving public finance sustainability in an ageing society.
