70 Years of Data Reveal a Surprising Twist on Aging

Using 70 years of data since 1950, Daron Acemoglu and other researchers, including the 2024 Nobel laureate in economics, found that countries with fertility rates one percentage point lower saw GDP per worker grow roughly 22% larger after 40 years and about 29% larger after 60 years. However, falling fertility had no clear effect on overall GDP growth, meaning productivity gains per worker were large enough to offset population decline. Within the United States as well, workers employed near cities with lower fertility rates saw higher wage growth.

Does aging slow growth? The conventional wisdom in economics suggested otherwise. Neoclassical growth models hold that when the working-age population share falls, output shrinks directly through reduced labor input, while an indirect channel—reduced capital investment—compounds the effect, acting as a headwind to growth. Empirical findings that a 1% increase in the working-age share raises per capita income by roughly 1% supported this view. As a result, the prevailing analysis was that the 'demographic dividend' would turn into a 'demographic burden,' slowing global economic growth and reducing incomes.

Behind these concerns lies the fact that demographics themselves are changing rapidly. According to the UN's 2024 World Population Prospects, the world population is projected to peak at 10.3 billion in the mid-2080s before declining to 10.2 billion by 2100, up from 8.2 billion in 2024. That is 700 million lower than the projection made a decade earlier, and it would mark the first global population decline since the Black Death in the 14th century. The main drivers are lower-than-expected fertility in populous countries like China and faster-than-expected fertility decline in sub-Saharan Africa.

So why did 70 years of data yield results that defy the conventional wisdom? The researchers point to technology's endogenous response to labor scarcity. When labor becomes scarce, the adoption of labor-saving technologies accelerates, while declining fertility encourages women's entry into formal labor markets, greater investment in human capital per child, and the reallocation of labor from low-productivity to high-productivity sectors. This leads to growth in total factor productivity and, through expanded capital stock, a shift toward exports centered on high-tech industries, and more labor-saving patents, ultimately boosting GDP per worker.

The fact that per capita GDP gains were larger in countries with relatively low birth rates, such as South Korea and Japan, shows these mechanisms have actually been at work. By contrast, high-birth-rate countries like the United States, Mexico, and Madagascar saw comparatively smaller gains. These results contradict the conclusion of the Solow growth model, which predicts that capital stock adjustment would lower per capita GDP growth and reduce total GDP.

The researchers argued that while future demographic changes cannot be reversed, aging does not necessarily lead to economic decline. The possibility of aging-driven slowdowns, they said, can be offset by rapid technological change. However, they noted that this reversal does not happen automatically without policy. They proposed expanding labor force participation among women and older adults, leveraging technology to raise productivity, and adopting immigration policies as policy responses.

Given that technology and ideas grow more important as labor becomes scarce, the researchers invoke Cicero's dictum that great achievement comes not from muscle or speed, but from reflection and judgment.