[Annotated] Slower growth in ageing economies is not inevitable

But avoiding it means tough policy choices

For the first time in history, the Earth has more people over the age of 65 than under the age of five^[각주:1]. In another two decades the ration^[각주:2] will be two-to-one^[각주:3], according to a recent analysis by Torsten Sløk of Deutche Bank. The trend has economists worried about everything from soaring pension costs to "secular stagnation" - the chronically weak growth that comes from^[각주:4] having too few investment opportunities to absorb available savings. The world's greying is inevitable. But its negative effects on growth are not. If older societies grow more slowly, that may be because they prefer familiarity to dynamism. 

Ageing slows growth in several ways. One is that there are fewer new workers to boost output. Workforces in some 40 countries are already shrinking because of demographic change. As the number of elderly people increases, governments may neglect growth-boosting public investment in education and infrastructure in favour of spending on pensions and health care. People in work^[각주:5], required to support ever more pensioners, must pay higher taxes. But the biggest hit to growth comes from weakening productivity. A study published in 2016, for example, examined economic performance across American states. It found that a rise of 10% in the share of a state's population that is over 60 cuts the growth rate of output per person by roughly half a percentage point, with two-thirds of that decline due to weaker growth in productivity. 

Why are older economies less productive? The answer is not, as one might suppose, that older workers are. Though some capabilities, notably physical ones, deteriorate with age, the overall effect is not dramatic. A study of German's manufacturing sector published in 2016 failed to detect a drop-off in^[각주:6] productivity in workers up to the age of 60. Companies can tweak employees' roles as^[각주:7] they get older in order to make best use of the advantages of age, such as extensive experience and professional connections. 

Furthermore, if weak productivity growth was caused by older workers producing less, pay patterns should reflect that. Wages would tend to rise at the beginning of a career and fall towards its end. But that is not what usually happens. Rather, according to a recent paper by economists at Moody's Analytics, a consultancy, wages are lower for everyone in companies with lots of older workers. It is not older workers' falling productivity that seems to hold back the economy^[각주:8], but their influence on those around them. That influence is potent: the authors reckon that as much as a percentage point of America's recent decline in annual productivity growth could be associated with ageing^[각주:9]. 

How this influence makes itself felt is unclear. But the authors suggest that companies with more older workers might be less eager to embrace new technologies. That might be because they are reluctant to make investments that would require employees to be retrained, given the shorter period over which they could hope to make a return on that training for those near the end of their careers^[각주:10]. Or older bosses might be to blame. Research indicates that younger managers are more likely to adopt new technologies than are older ones. This may seem obvious: older people's greater aversion to new technology^[각주:11] is a cliché^[각주:12]. And at least anecdotally^[각주:13], greying industries^[각주:14] do seem more averse to change^[각주:15]. 

If the evidence suggested that ageing economies struggled primarily because of slow-growing labour forces and fast-growing pension costs, it would make sense to focus policy efforts on keeping people in work longer - by raising retirement ages, for example. But if, as seems to be the case, reluctance to embrace new technologies is a bigger issue, other goals should take priority - in particular, boosting competition. In America, increasing industrial concentration and persistently high profits are spurring renewed interest in antitrust rules. The benefits of breaking up powerful firms and increasing competition might be even bigger than thought, if conservative old firms are thereby^[각주:16] spurred to^[각주:17] make better use of newer technologies^[각주:18]. 

There are other measures that could help. Removing barriers to job-switching, for example by making benefits more portable^[각주:19], could shorten average tenures and help stop companies' cultures becoming ossified^[각주:20]. Best of all would be^[각주:21] more immigration. An influx of young foreign workers would address nearly all the ways in which population ageing depresses growth. It would not only expand the labour force and create new taxpayers, but would mean more and younger companies, and greater openness to new technologies. And there would be plenty of willing takers in^[각주:22] poorer countries with younger populations. 

No men for old country

Societies with lots of older workers are also societies with lots of older voters, however. Those voters are, on average, more politically conservative than younger people, and less likely to support increased immigration. People of all ages would gain from policies that boosted growth and productivity. But given the choice between a dynamic but unfamiliar society and a static but familiar one, older countries tend to opt for the second. In hindsight^[각주:23], the demographic boom that coincided with^[각주:24] industrialization in^[각주:25] rich countries may have had an underappreciated benefit^[각주:26]: it created a big constituency in favour of embracing new technologies and the opportunities they provided. 

Technology may at some point overcome the stifling effect of^[각주:27] ageing^[각주:28]. In a new paper Daron Acemoglu of the Massachusetts Institute of Technology and Pascual Restrepo of Boston University find that when young workers are sufficiently scarce^[각주:29], manufacturers invest in more automation^[각주:30], and experience faster productivity growth as a result. Robots have yet to make a big impact in the service sector and beyond, but as their capabilities improve and jobs for younger people go begging that may change^[각주:31]. The world could use more flexibility and productivity now. But stagnation may end eventually, once the robots are promoted to management. 

1. under the age of ; ~의 나이 미만의 [본문으로]
2. ration ; 3. [sing.] ~ (of sth) (정상적인알맞은) 양 [본문으로]
3. two to one ; 2대 1 [본문으로]
4. chronically ; 고질적으로, 만성적으로(continually, persistently). [본문으로]
5. in work ; 일을 가지고 있는, 취직한; 손을 댄 ;; having/not having a paid job [본문으로]
6. drop-off ; 2. 감소, 하락, 쇠퇴 [본문으로]
7. tweak ; 2. [타동사] (기계시스템 등을 약간) 수정[변경]하다 [본문으로]
8. hold back ; 2. (진전·발전을) 방해[저해]하다 [본문으로]
9. be associated with ; ~와 관련되다 [본문으로]
10. make a return ; …에 답례하다, 보답하다 ;; 흐름상 "성과를 얻다" 정도의 의미 [본문으로]
11. aversion ; [C, U] ~ (to sb/sth) 아주 싫어함, 혐오감 ;; [NOUN] If you have an aversion to someone or something, you dislike them very much. [본문으로]
12. cliche ; 1. (진부한) 판에 박은 문구, 진부한 표현[생각, 행동] ;; 미국식 [kliːˈʃeɪ] 영국식 [ˈkliːʃeɪ] [본문으로]
13. anecdotally ; [부사] 일화(逸話)로, 이야깃거리로. ;; 입증되지는 않았지만 [본문으로]
14. greying ; [형용사] containing an increasing number of older people [본문으로]
15. averse ; [명사 앞에는 안 씀] 1. not ~ to sth/to doing sth ~을 싫어[반대]하지 않는 ;; 2. ~ to sth/to doing sth (격식) ~을 싫어하는[반대하는] [본문으로]
16. thereby ; [부사] (격식) 그렇게 함으로써, 그것 때문에 ;; [ADV] You use thereby to introduce an important result or consequence of the event or action you have just mentioned. [본문으로]
17. spur ; 1. [타동사] ~ sb/sth (on) (to sth/to do sth) 원동력[자극제]이 되다, 자극하다 ;; [VERB] If one thing spurs you to do another, it encourages you to do it. [본문으로]
18. make better use of ; 유효 적절히 사용하다 [본문으로]
19. portable ; 3. <권리 등이> 이동 계속(係屬)이 가능한 ;; [ADJ] A portable machine or device is designed to be easily carried or moved. [본문으로]
20. ossify ; [자, 타동사] 2. 무정하게 하다[되다], 완고하게 하다[되다] ; 인습적으로 하다[되다], 보수적으로 하다[되다]. ;; [VERB] If an idea, system, or organization ossifies or if something ossifies it, it becomes fixed and difficult to change. [본문으로]
21. the 없이 best를 사용한 것을 확인 [본문으로]
22. taker ; 1. [주로 복수로] (제의 등에) 선뜻 응하는 사람 ;; [NOUN] If there are no takers for something such as an investment or a challenge, nobody is willing to accept it. [본문으로]
23. in hindsight ; 지나고 나서 보니까 [본문으로]
24. coincide ; ~ (with sth/sb)) 1. [자동사] (둘 이상의 일이) 동시에 일어나다 ;; [VERB] If one event coincides with another, they happen at the same time. [본문으로]
25. industrialization ; [U] 산업[공업]화 [본문으로]
26. underappreciated ; [형용사] 인정을 덜 받는 ;; 정당하게 평가되지 못하는 [본문으로]
27. stifling ; (공기 따위가) 숨 막힐 듯한, 답답한; (예의범절 따위가) 딱딱한, 거북한 [본문으로]
28. ageing ; [NOUN] Ageing is the process of becoming old or becoming worn out. [본문으로]
29. scarce ; (scarcer ; -cest) 1. [서술적 용법] 조금밖에 없는, 불충분한, 귀한(scanty, insufficient)(of). ;; 2. 귀한, 진귀한, 드문(uncommon, rare). ;; [ADJ] If something is scarce, there is not enough of it. [본문으로]
30. automation ; [U] 자동화 [본문으로]
31. go begging ; 구걸하고 다니다, 원하는 사람이 없다, 안 팔리다(=be unwanted). ;; (물건 등을) 아무도 원하지 않다, 팔 데가 없다(=be in little demand) ;; be unwanted [본문으로]