One thing that we’ve constantly talked about on this blog over the years is the economic headwind that many, particularly developed, countries will face due to an ageing and declining population. Not only will an older population cost its government more in healthcare and pension, it will also produce less as there are relatively fewer workers to be taxed.

Furthermore, as this piece in Pakistan’s Express Tribune notes, there is also a demand slowdown in an ageing society, further deepening economic gloom. This is because, when a new generation enters the workforce in their 20s, they spend money: cars; houses; other household items; children’s education etc. But about age 50 this consumption peaks and then starts to decline. If fewer people are entering into the high consumption time of life then there will be less spending overall and a further contraction in the economy.

This is one reason that relying on increased productivity through computing, the internet and robotics to offset an ageing economy might not work: there will be fewer young people spending up large.

In the recent report by Mckinsey Global Institute, “Urban World: Meeting the Demographic Challenges”, the problem of demographic shifts in Japan, the United States and Western Europe was highlighted. It warns that, one after the other, developed nations will follow the Japanese trend of an aging society and slow economic growth. Following Japan’s lead will be South Korea, Germany, other Western European countries, the US and then even the emerging economy of China.

Of course, as we’ve also mentioned before, one way to ameliorate this demographic decline and economic slowdown is to allow large numbers of young immigrants into your country to bolster the next generation of workers and taxpayers. According to World Bank President Jim Yong Kim:

“If countries with aging populations can create a path for refugees and migrants to participate in the economy, everyone benefits. Most of the evidence suggests that migrants will work hard and contribute more in taxes than they consume in social services.”

The trouble is that while this might make economic sense, politically it will be very hard to sell in many countries. Japan is steadfast against large scale immigration, despite its rapidly ageing and declining population. Western European nations are probably not going to be very keen for large scale immigration after their experiences over the last couple of years.

China and South Korea are also probably unlikely to open their doors wide anytime soon. But as the years pass and the developing world continues to grow, while Western nations continue to grow old, I can imagine that more people will be adding their voices to Jim Yong Kim’s calls. But will those political pressures go away? 

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Marcus Roberts is a Senior Researcher at the Maxim Institute in Auckland, New Zealand, and was co-editor of the former MercatorNet blog, Demography is Destiny. Marcus has a background in the law, both...