The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity


Maestas, Nicole, Kathleen J. Mullen and David Powell. 2023. “The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity.” American Economic Journal: Macroeconomics, 15 (2):306-32.

DOI: 10.1257/mac.20190196

Replication package link:

Online appendix:



Population aging is expected to slow US economic growth. We use variation in the predetermined component of population aging across states to estimate the impact of aging on growth in GDP per capita for 1980–2010. We find that each 10 percent increase in the fraction of the population age 60+ decreased per capita GDP by 5.5 percent. One-third of the reduction arose from slower employment growth; two-thirds due to slower labor productivity growth. Labor compensation and wages also declined in response. Our estimate implies population aging reduced the growth rate in GDP per capita by 0.3 percentage points per year during 1980–2010.

Author(s): Maestas, Nicole, Kathleen J. Mullen and David Powell

Publication Date: 2023

Publication Site: American Economic Journal: Macroeconomics, AEAweb

Visualizing the Coming Shift in Global Economic Power (2006-2036p)




China is expected to surpass the U.S. by the year 2030. A faster than expected recovery in the U.S. in 2021, and China’s struggles under the “Zero-COVID” policies have delayed the country taking the top spot by about two years.

China has maintained its positive GDP growth due to the stability provided by domestic demand. This has proven crucial in sustaining the country’s economic growth. China’s fiscal and economic policy had focused on this prior to the pandemic over fears of growing Western trade restrictions.

Author(s): Raul Amoros

Publication Date: 13 Jun 2022

Publication Site: Visual Capitalist

Covid-19, Endemic or Not, Will Still Make Us Poorer



Endemic Covid-19 could thus become a lasting “supply shock” that degrades how much economies can produce, similar to the surge in oil prices in the 1970s. In October, the International Monetary Fund estimated global output this year would still be 3% lower than it had projected in 2019, with Western Europe and Latin America showing much bigger hits than China and Japan, where Covid-19’s toll has been much lower.

The U.S. is an exception: Output in the last quarter of 2021 was roughly back to its pre-pandemic trend. But the economy, distorted and disrupted by Covid-19, is struggling to sustain this level of output, as the surge in inflation to 7% demonstrates.

Covid-19 might have boosted efficiency in some industries by speeding up digitization and adoption of remote work. Goldman Sachs economists estimate this delivered a 3% to 4% boost to U.S. productivity.

But some of the shift to remote operations is involuntary, and some of the rise in productivity might reflect an overworked workforce. Indeed, the pandemic has left the labor force smaller, sicker and less happy. Absences due to illness among employed workers have averaged 50% higher in the last two years. In early January, nearly 12 million people weren’t working because they were sick with Covid-19, caring for someone with coronavirus, or concerned about getting or spreading the disease, according to a regular Census Bureau survey. The figure hasn’t been below 4 million since June 2020.

In the past year, workers have reported declining satisfaction with their wages and a rising “reservation wage,” that is, how much they would have to be paid to accept a new job, according to the Federal Reserve Bank of New York. This might reflect inflation, changed expectations, or stress due to Covid-19 testing, masks and vaccine mandates, or their absence.

For employers, this makes it much harder to attract the necessary staff. Nursing homes have boosted hourly wages 14% since the start of the pandemic, yet staffing has plummeted 12%, impairing their ability to accept new patients. Such shortages impose a cost that doesn’t show up in gross domestic product.

Author(s): Greg Ip

Publication Date: 19 Jan 2022

Publication Site: WSJ

The Fed’s Doomsday Prophet Has a Dire Warning About Where We’re Headed



In May of 2020, Hoenig published a paper that spelled out his grim verdict on the age of easy money, from 2010 until now. He compared two periods of economic growth: The period between 1992 and 2000 and the one between 2010 and 2018. These periods were comparable because they were both long periods of economic stability after a recession, he argued. The biggest difference was the Federal Reserve’s extraordinary experiments in money printing during the latter period, during which time productivity, earnings and growth were weak. During the 1990s, labor productivity increased at an annual average rate of 2.3 percent, about twice as much as during the age of easy money. Real median weekly earnings for wage and salary employees rose by 0.7 percent on average annually during the 1990s, compared to only 0.26 percent during the 2010s. Average real gross domestic product growth — a measure of the overall economy — rose an average of 3.8 percent annually during the 1990s, but by only 2.3 percent during the recent decade.

The only part of the economy that seemed to benefit under quantitative easing and zero-percent interest rates was the market for assets. The stock market more than doubled in value during the 2010s. Even after the crash of 2020, the markets continued their stellar growth and returns. Corporate debt was another super-hot market, stoked by the Fed, rising from about $6 trillion in 2010 to a record $10 trillion at the end of 2019.

Author(s): Christopher Leonard

Publication Date: 28 Dec 2021

Publication Site: Politico

Is the Great Stagnation Over?


Cowen cautioned that many technological advances would doubtlessly improve human welfare but still might not show up in U.S. gross domestic product (GDP) and productivity statistics. For example, the new plug-and-play vaccine platforms may well result in highly effective vaccines for malaria and HIV, and that would be a huge boon for millions of people living in poor countries, but those benefits would be unlikely to show up U.S. GDP per capita statistics. He also pointed out that the recent significant advances in green energy production are occurring chiefly as a way to avoid the possible catastrophe of man-made climate change. Because climate change is a hidden counterfactual, replacing fossil fuels with solar, wind, and batteries would not necessarily lead people to feel as though their standard of living had risen.

Strain countered that the toll that infectious disease takes on the stunting of talents and skills in poor countries would be greatly ameliorated by rolling out cheap effective vaccines now made possible by messenger RNA technology. Over a longer time horizon, the U.S. and the rest of the world would significantly benefit from efflorescence of invention and entrepreneurship arising in regions whose development is held back by prevalent plagues.

Author(s): Ronald Bailey

Publication Date: 7 April 2021

Publication Site: Reason

Industrial production and investment surge in China




ON MARCH 5TH at its annual parliament, the National People’s Congress (NPC), China’s government revealed an economic-growth target of “more than 6%” for this year, a bar it is expected to clear with ease. Take the latest data. China’s key economic indicators for January and February, published on Monday, were buoyant. Industrial production and retail sales, for example, are soaring—35.1% and 33.8% higher than a year ago, respectively, beating consensus forecasts. Fixed-asset investment surged by 35% year on year, but still fell below expectations.

This year’s rocket-fuelled figures are even harder to decipher than usual because they are compared with record lows last year, during the first wave of covid-19 outbreaks. Macquarie, a bank, says that if you remove the effect of the pandemic, underlying retail sales were up by 3.1% for the first two months of 2021. This implies consumption accelerated after a few small outbreaks were brought under control in Beijing in January. Oxford Economics, a research group, says it expects household consumption to become the main engine of economic growth from the second quarter of 2021, as travel restrictions are eased. But in the first quarter, growth will remain sluggish.

Publication Date: 16 March 2021

Publication Site: The Economist

U.S. Set to Power Global Economic Recovery From Covid-19




The world economy is likely to grow by around 6% this year, according to Oxford Economics, the fastest rate in almost half a century, as vaccine campaigns allow pandemic restrictions to be lifted and businesses to snap back.

For the first time since 2005, the U.S. is expected this year to make a bigger contribution to global growth than China, said the research firm. After the 2008 financial crisis, the global economic recovery was powered by China, as the U.S. experienced the weakest revival since the Great Depression.

Author(s): Tom Fairless

Publication Date: 7 March 2021

Publication Site: Wall Street Journal

EXPLAINER: Why rising rates are unsettling Wall Street




Coronavirus vaccines will hopefully get economies humming this year, as people feel comfortable returning to shops, businesses reopen and workers get jobs again. The International Monetary Fund expects the global economy to grow 5.5% this year following last year’s 3.5% plunge.

A stronger economy often coincides with higher inflation, though it’s been generally trending downward for decades. Congress is also close to pumping another $1.9 trillion into the U.S. economy, which could further boost growth and inflation.


Publication Date: 26 February 2021

Publication Site: Associated Press