No evidence ageing or declining populations compromise socio-economic performance of countries (2508.16872v1)

Abstract: Concerns about declining or ageing populations often centre on the fear that fewer people will translate to a weaker economy and lower living standards. But these fears are frequently based on oversimplified or misapplied interpretations of economic models, and appear to be driven more by political agendas rather than evidence. In reality, long-term prosperity depends more on how societies invest in education, skills, and technology, not just how many people they have. We examine national data at the global scale to test whether slower population growth or ageing populations are linked to worse economic or social outcomes. Using nine different indices of socio-economic performance (domestic comprehensive wealth, income equality, research and development expenditure, patent applications, human capital, corruption perception index, freedom, planetary pressure-adjusted Human Development Index, healthy life expectancy at birth), we find no evidence that they are. In fact, we find that countries with low or negative population growth perform better on average for all indicators, and that even within-country time series show that most older and slower-growing populations fare better on average. These findings challenge common assumptions and highlight the need to move beyond fear-based and politically motivated narratives toward a more informed understanding of what truly supports thriving societies.

• The paper challenges the claim that ageing populations undermine economic performance, showing that older, slower-growing populations often yield higher wealth and equality.
• It uses advanced methods like resampled boosted regression trees and Newey-West estimators to robustly link dependency ratios with productivity, innovation, and well-being.
• The findings advocate policy shifts from growth targets to structural reforms in education, pension design, and immigration to leverage an ageing workforce.

No Evidence Ageing or Declining Populations Compromise Socio-Economic Performance of Countries

Overview and Motivation

This paper rigorously interrogates the widely held assumption that ageing or declining populations inherently undermine national socio-economic performance. The authors challenge the political and media-driven narrative that demographic contraction or population ageing precipitates economic stagnation, reduced productivity, and diminished well-being. Instead, they employ a comprehensive, multi-indicator, global-scale analysis to test whether slower population growth or higher dependency ratios (proportion of population aged ≥65 to those aged 16–64) are associated with adverse outcomes across wealth, income equality, productivity, corruption, freedom, well-being, and health.

Methodological Framework

The paper leverages country-level data from authoritative sources (World Bank, United Nations, WHO, Transparency International, Freedom House, Penn World Table) spanning 1950–2021. The primary predictors are:

• Mean rate of population change ($r$): Calculated for both long-term (1950–2021) and recent (2012–2021) intervals.
• Dependency ratio: Ratio of population aged ≥65 to those aged 16–64.
• Total population size: Included to control for scale effects.

Nine core response variables are analyzed: domestic comprehensive wealth index, Gini coefficient, R&D expenditure, per-capita patent applications, human capital index, corruption perception index, freedom score, planetary pressure-adjusted Human Development Index (HDI), and healthy life expectancy at birth.

The analytical approach centers on resampled boosted regression trees (BRTs), which are robust to nonlinearity, missing data, and spatial autocorrelation. BRTs provide variable importance metrics and predictive relationships without imposing parametric constraints. Cross-validation and kappa-clipping are used to mitigate overfitting and outlier influence. Additionally, within-country time series analyses (using Newey-West HAC estimators) assess temporal relationships between dependency ratio and response variables.

Key Findings

Wealth and Income Equality

• Wealth: The dependency ratio is the dominant predictor (43.5–82.5% relative influence). Countries with higher dependency ratios (older populations) exhibit higher per-capita wealth. There is a threshold effect: wealth declines rapidly below a dependency ratio of ~0.09, stabilizing above this value.
• Income Equality: Slower or negative population growth correlates with higher income equality. The Gini coefficient shows a weak negative relationship with dependency ratio, indicating that older, slower-growing populations tend to be more egalitarian.

Productivity

• R&D Expenditure, Patent Applications, Human Capital: All three indices are strongly positively related to dependency ratio (relative influence up to 92%). Older populations are associated with higher productivity metrics. Population growth rate and total population size have negligible effects.

Corruption and Freedom

• Corruption: Lower perceived corruption is associated with higher dependency ratios. The effect of population growth rate is weak.
• Freedom: Higher freedom scores are observed in countries with older populations. The relationship with population growth rate is not significant.

Well-being and Health

• Planetary Pressure-Adjusted HDI: This index, which discounts for environmental degradation, increases with dependency ratio. There is a threshold below which well-being declines rapidly.
• Healthy Life Expectancy: Older countries have higher healthy life expectancy. Population growth rate and size are weak predictors.

Time Series Analysis

• In within-country analyses, >50% of countries with significant temporal relationships show improved outcomes as their populations age for eight of nine response variables. The only exception is the corruption perception index, where a slight majority show worse outcomes with ageing.
• Countries with negative relationships (worse outcomes as populations age) are predominantly young and fast-growing, suggesting that adverse outcomes are driven by other socio-economic and political factors, not demographic ageing or decline.

Contradictory and Strong Claims

• Contradicts Political Rhetoric: The paper finds no empirical support for the claim that ageing or declining populations compromise economic performance, productivity, income distribution, political stability, well-being, or health.
• Positive Association: In most cases, older and slower-growing populations have higher socio-economic performance indicators.
• Labour Shortages: The paper asserts that labour shortages are not a consequence of demographic ageing but rather of restrictive immigration policies.
• Dependency Ratio: The conventional dependency ratio is conservative; it does not account for increased workforce participation among older adults or the economic value of volunteerism.

Theoretical and Practical Implications

Economic Theory

• The findings align with endogenous growth models emphasizing capital and knowledge per capita over sheer population size.
• The results support degrowth theory, which posits that well-being and sustainability do not require perpetual GDP growth or population expansion.

Policy Implications

• Policymakers should shift focus from population targets to investments in education, skills, and technology.
• Structural reforms (e.g., delayed retirement, pension redesign, enhanced education) can mitigate fiscal challenges associated with ageing.
• Immigration policy is critical for addressing sectoral labour shortages.

Limitations and Future Directions

• The dependency ratio used is a blunt measure; future work should incorporate more nuanced metrics of economic dependency and workforce participation.
• The paper does not address subnational heterogeneity or the impact of demographic change on specific sectors.
• Further research should explore causal mechanisms and the role of institutional quality in mediating demographic-economic relationships.

Conclusion

This paper provides robust, multi-dimensional evidence that ageing or declining populations do not inherently compromise national socio-economic performance. On the contrary, countries with older or slower-growing populations tend to be wealthier, more productive, more egalitarian, less corrupt, freer, and healthier. The results challenge fear-based and politically motivated narratives, advocating for a policy focus on capital, productivity, and institutional adaptation rather than demographic expansion. Future research should refine dependency metrics and investigate sectoral and subnational dynamics, but the central conclusion is clear: demographic ageing and decline are not threats to prosperity under appropriate policy and institutional frameworks.