Aging Population’s Effect on Economic Output

Abstract

This study investigates the economic implications of demographic aging, a phenomenon increasingly prevalent in both developed and developing countries. Utilizing the Solow-Swan model as the foundational framework for analysis, the research conclusively demonstrates that an increase in the proportion of the elderly population directly correlates with a measurable decline in aggregate economic output. This downturn is primarily attributed to escalating healthcare and pension expenditures, coupled with a diminishing labor force. The paper also conducts a rigorous evaluation of various policy interventions designed to alleviate these economic challenges. While the research explores options such as boosting birth rates, fostering technological advancements, and increasing savings rate, the study ultimately advocates for a more immediate and practical approach: the reintegration of the elderly into the labor market. Not only does this strategy sustains economic productivity, but it also capitalizes on the invaluable experience possessed by older workers. This research serves as an exhaustive resource for policymakers and scholars interested in the economic dimensions of demographic transitions.