Abstract :
This article provides new calculations on the
effects of demographic change on living standards
in all 30 OECD countries using the latest
demographic projections up to 2050 from the
United Nations, World Population Prospects,
2004 Revision. The calculations include several
potential dividends that could offset, at
least in part, the costs of a lower working age
population share. The effects of demographic
change calculated here are mechanical in that
there is no explicit optimising behaviour. In the
worst case scenario, which assumes zero potential
dividends and no increase in labour
force participation rates, the negative effect of
demographic change on living standards
among OECD countries over the whole period
from 2006 to 2050 ranges from zero to 28 per
cent, with an average over all countries of 15.5
per cent. In the best case scenario the average
effect is zero. About half of the difference between
the best and worst case scenarios is
accounted for by higher labour force participation
and about half by the potential dividends
from demographic change.
