The world is undergoing one of the biggest demographic transitions it has ever experienced. About two-thirds of humanity now lives in countries where fertility is too low for each generation to replace itself. The result is rapidly aging workforces in most of the world, and the population in parts of Europe is already shrinking.
One way to measure aging is by looking at the old-age dependency ratio, a demographic indicator that captures the number of people in working age (15 to 64) relative to the number of elderly, retired people (64 and older). By 2035, for instance, Italy’s old-age dependency ratio will have risen from an already high 39% to 50%. Greece, Portugal, and Spain are close behind.
A similar demographic shift is underway in Latin America, including in Cuba, Puerto Rico, Costa Rica, and Colombia. Just a few decades ago, these countries had much smaller elderly populations compared to Europe and thus had lower old-age dependency ratios. Now they are catching up with Europe on this measure.
In some parts of Asia, demographic concerns are more heightened as populations are expected to age even faster than in Europe and Latin America, especially in China, South Korea, Taiwan, and Thailand. By 2035, the old-age dependency ratio is expected to increase from 21% to almost 34% in China. In Hong Kong, it is expected to exceed 55%.
North America’s population will continue to grow and will age more moderately, mostly because of immigration. In the United States, the old-age dependency ratio is forecast to increase from around 28.8% today to about 34% by 2035. Immigration policy will shape the exact extent of population change and aging in the country.
The implications of this global trend are far-reaching, and for many, simply alarming. As the International Monetary Fund (IMF) puts it starkly: “For those countries where fewer workers are available and labor force participation rates drop, economic output is bound to fall.” Other forecasts warning about pressures on living standards, fiscal problems, and broader social challenges are equally gloomy. And aging will affect politics and social dynamics in various, often unforeseen ways, opening up new fissures in society.
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