Health, an ageing labour force, and the economy: Does health moderate the relationship between population age-structure and economic growth?

Abstract Research often suggests that population ageing will be detrimental for the economy due to increased labour market exits and lost productivity, however the role of population health and disability at older ages is not well established. Identifying whether the health of older people affects economic outcomes is challenging due to methodological issues. Using country-level panel data, we estimate the relationship between the size of the older working age population (aged 55-69) and economic growth across 180 countries from 1990 to 2017. We run models using annual data and 5-year moving averages of real per capita GDP growth as dependent variables. This enables us to quantify the gains in real per capita GDP growth associated with a healthy older working-age population on a country-by-country basis. The initial models confirm an inverse-U or hump-shaped relationship between population age groups and economic growth. In the 5 year average GDP growth model, the coefficient for the inverse of YLDs among 55-69 year olds is positive and significant at p < 0.01. The interaction term is significant at p < 0.001 in the same model. Across all countries, a 5% improvement in YLDs is associated with at minimum 0.3% predicted additional annual real per capita GDP growth. While a larger share of the older working-age population at ages 55-69 has historically been associated with slower real per capita GDP growth, low levels of disability in this age group can reduce or even eliminate these adverse economic effects. We consistently find a significant positive interaction between disability and the share of the population at ages 55-69, suggesting that adverse economic effects are amenable to policy intervention.