Sample Economics Essay Paper on Aging Population Growth

Aging Population Growth

            Over the next few years, the United States will be experiencing a shift in terms of population composition.  The population aged 65 and above would have increased from 14 to 21 percent. This growth will be associated with changes in macroeconomics. This means that some combinations will be required in increased labor input and lower consumption growth. The manifestation of these changes will be dependent on positive effects on macroeconomic variable paths such as rate of return, wages, and capital. This change in population could be referred to as population aging which could be attributed to reduction in fertility because of the baby boom and a continued increase in life expectancy. These are some of the factors responsible for lowering the CPF and the support ratio. Reduction in fertility also affects the growth rate related to the labor force which in turn offsets effect on the CPF. The population aging is bound to have impact on economic aspects in different ways.

            This is true because, in the United States, the increase in old age is evident. Today, 21 percent of the expected life years are spent in retirement as compared to the 15% which was the percentage in 1990 (Sheiner, 2014). As if that is not enough, the number is expected to increase to 24% which means that the United States and the rich nations will be experiencing large numbers of the old population. Today, families in the United States truly have either one or two children maximum as opposed to recent decades where fertility was much better. The number of younger people is much higher in the United States and other rich nations which mean that they will also be experiencing a rapid growth in the old population.

            Even though consequences of population aging will depend on how long people decide to work, I believe in the fact that it will be a major problem to the economy of a country. People between 40-64 years are considered as the nearly aged people. This group of people is associated with major health implications which include diabetes and obesity. This means a rise in ill health and disability which means they might not be able to stay long in the work force. Although the article predicts minimal changes in in the capacity to work due to aging in population and labor force, there will be tax implications. The production rate of a 20 year old cannot be compared to that of a 74 year old despite minimal changes in proportions of characteristics such as education (Sheiner, 2014). The capability and ability to perform remains a challenge to people above 65 years of age.

            Though the changes might not be sudden, global aging in population is bound to cause changes in asset returns or product prices. The assumption on minimal decrease in international capital flow because capital markets are global might not be accurate. This is because there are controversies of whether equity will increase or decrease with the aging population increase. The United States will be forced to work on an assumption that improving investments on education and making it available would substitute productivity and quality of labor for worker at some degree. This will be in an effort to prevent increases in capital labor ratios (Sheiner, 2014). The government would be operating on other assumptions like housing prices for the elderly since with the increase in aging population will is expected to grow.

            In conclusion, even though the changes in aging population will be minimal in decades to come, they will affect the whole population at large. Looking at statistics, they show that this is a situation that is slowly growing over the decades. This means that economists need to plan properly because it affects important aspects such as labor force and growth rate. Issues such as health and labor trends of the elderly should be put into consideration regardless of the fact that market capital is not only dependent on local markets but on global markets too. Increase in population aging will have implications on economy in one way or the other.

References

Sheiner. L (2014) Macroeconomic Impact of Population Aging. The Determinants of the Macroeconomic Implications of Aging. American Economic Review and Papers Proceedings.