Economic Implications of an Aging Population

An aging population exacerbates economic challenges, as seen in countries like Japan, which has experienced stagnant GDP growth due to its high percentage of elderly citizens. This demographic shift results in fewer young people to drive innovation, where economist Charles Jones notes that a smaller workforce can produce fewer ideas, stifling economic growth. Furthermore, increased expenses for healthcare and pensions, combined with a dwindling tax base, create a vicious cycle of economic decline, leading to reduced government spending on critical infrastructure. To combat these issues, options such as extending the working age and promoting interstate migration are being considered to rejuvenate the workforce and sustain economic vitality.