Signal Prospective ageing measure halves the OECD growth drag from a shrinking working-age population

Summary

A 2023 NBER working paper by Kotschy and Bloom examines how growth projections change when ageing is measured by prospective rather than chronological age. They find that, for OECD countries, the drag that a shrinking working-age population puts on GDP growth between 2020 and 2050 falls by half under this approach. The report presents Spain as the European country with the highest life expectancy at birth and says its improvement over chronological calculations is even larger. The finding supports the academic proposal to redefine the old-age threshold in terms of remaining life expectancy. The report's underlying concern is that a fixed 65 cutoff ignores recent gains in longevity and quality of life. It offers the result as evidence that demography is not destiny.