Fernando Fischmann

Why an aging population may be good for innovation

30 September, 2014 / Articles

The conventional wisdom is that an aging population is a net drag on a nation’s economic competitiveness. America, these naysayers point out, is almost ready to fall off a demographic cliff once the aging Baby Boomers start retiring. But in a paper published by the journal PLOS ONE, a group of international researchers at the IIASA, the Max Planck Institute and the University of Washington proposed exactly the opposite: In a Western, industrialized democracy, having an aging population might actually turn out to be a competitive advantage.

It’s an argument so counter-intuitive that it’s worth a closer look.

What the researchers found was that there were five reasons why an aging population might bring net benefits for any society. The researchers focused on Germany, which is second only to Japan in terms of an aging population — but the findings are relevant for all societies. Most importantly, an aging population could lead to productivity gains throughout the economy due to expected increases in workers’ educational levels. These productivity gains would theoretically offset the loss of workers in the labor force. Think of America’s future workforce in terms of a smaller pool of highly productive workers rather than a shrinking pool of average productivity workers.

There’s also a real argument to be made for the link between an aging population and innovation. This all starts with quality of life: The study suggests that the relationship between leisure and work will change in the future, with leisure time increasing on average. Everybody is going to have a lot more time on their hands — not just people in retirement – so you better hope that the people with time to tinker and innovate will be relatively well-educated, healthy and financially secure. And that’s exactly what these demographic researchers say is going to happen with an aging population.




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