Aging and Economic Growth : The Role of Factor Markets and of Fundamental Pension Reforms

This paper analyzes the implications of demographic change for economic growth in different countries. Quantitative projections are based on a multi-country overlapping generations model that is augmented with actual demographic data and projections for different OECD regions. According to the simulation results, per capita incomes decline substantially when aging processes peak in some regions and differences between regions are quite large. Additional capital formation and increases in labor supply resulting from a fundamental pension reform are found to mitigate but not to solve the problem