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The Demographic Dividend: A New Perspective on the Economic Consequences of Population Change

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For decades, economists and social thinkers have debated the influence of population change on economic growth. Three alternative positions define this debate Population growth either 1 restricts, 2 promotes, or 3 is independent of economic growth. Proponents of each explanation can find evidence to support their cases. All of these explanations, however, focus on population size and population growth. In recent years, however, the debate has given insufficient attention to a critical issue the age structure of the population that is, the way in which the population is distributed across different age groups, which can change dramatically as fertility and mortality rates change. Because peoples economic behavior and needs vary at different stages of life, changes in a countrys age structure can have significant effects on its economic performance. Nations with a high proportion of children are likely to devote a high proportion of resources to their care, which tends to depress the pace of economic growth. By contrast, if most of a nations population falls within the working ages, the added productivity of this group can produce a demographic dividend of economic growth, assuming that policies to take advantage of this are in place. In fact, the combined effect of this large working-age population and health, family, labor, financial, and human capital policies can effect virtuous cycles of wealth creation. And if a large proportion of a nations population consists of the elderly, the effects can be similar to those of a very young population.

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  • Sociology and Law

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