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HONOLULU (Feb. 24, 2011)—Changes in population age structure are occurring more quickly today than at any time in human history, posing both opportunities and challenges for policymakers, according to the National Transfer Accounts (NTA) network, a collaborative effort that analyzes economic aspects of population aging around the world.


Are public pension and healthcare programs sustainable? Will taxpayers be able—and willing—to provide financial support for growing numbers of old people? Will the expansion of elderly populations slow economic growth? And what are the likely impacts on social and economic inequality? Such questions are explored in the first edition of the NTA Bulletin, a new series of policy briefs edited at the East-West Center, one of two NTA lead institutions, along with the University of California at Berkeley’s Center for the Economics and Demography of Aging.

“By providing estimates of income and consumption by age, NTA adds an important dimension to measures of Gross Domestic Product and other widely used economic indicators,” says the Bulletin’s first article, “National Transfer Accounts: A new way to look at population change and economic growth.” Policymakers need to understand the likely consequences of demographic change in their own societies in order to develop sustainable programs in areas of healthcare, education, pensions and policies that foster economic growth and generational equity, according to NTA researchers.

In roughly half the countries of the world—concentrated in Africa, Latin America, and South Asia—the working-age population is growing faster than other groups, which creates a highly favorable age structure for economic growth, according to the article. “For these countries,” the authors write, “it will be valuable to invest this ‘dividend’ in capital formation and in the education and health of young people, who will be tomorrow’s workers.” Countries in Europe, North America, and East Asia have already completed this phase of the demographic transition, and their populations will increasingly consist of very few children, not many workers, and many elderly people, according to the Bulletin article.

“Changes in population age structure result from the fact that people are having fewer children and, to a lesser extent, because people are living longer,” the article says. “Fewer children today means fewer workers and fewer taxpayers tomorrow, along with relatively large elderly populations.” This change in age structure can be surprisingly rapid, according to NTA researchers. In Japan, for example, the proportion of the population age 60 and above has nearly doubled in the past 20 years—jumping from 17 percent in 1990 to 31 percent in 2010.

Brazil is considered a middle-income country, but its generous pension programs are typical of many high-income countries in Europe, the Bulletin article says. As elderly populations expand, these governments will find it difficult to sustain such generous public-transfer programs. Similar concerns face policymakers in the United States, with its rapidly escalating healthcare costs.

But will population aging inevitably lead to poverty among the elderly and an excessive burden on working-age adults? Perhaps not, according to the Bulletin article. Today, the elderly in countries with less generous public support tend to depend largely on their own assets, the article says. “Policymakers need to understand the likely consequences of these demographic changes in their own societies—and what is likely to happen in the future—accurately and in detail,” according to the article. “NTA is collecting data and developing analytical tools to fill this critical information need.”

East-West Center researchers Andrew Mason and Sang Hyop Lee argue in a separate, recently released policy brief that the rapid growth of elderly populations in Asia may bring two important national goals into conflict. The first is to develop socioeconomic systems that will provide economic security to the growing number of old people. The second is to sustain strong economic growth.

Achieving these two goals, write Mason and Lee, will require new policies.