The 'demographic timebomb' defused

Don't believe the hype about ageing populations imposing impossible costs: productivity is growing faster than longevity

Dean Baker | Thursday 20 January 2011 15.31 GMT

The debate over the demographic trends in the United States and other wealthy countries can be described a debate between those who care about our children and those who want more of them. This is apparent once a little logic is applied to the tales of demographic disaster being hawked by those concerned about declining birth rates and greater longevity.

The basic story is that we are seeing a declining ratio of workers to retirees. This is supposed to mean that our children and our grandchildren will have an unbearable burden supporting us in our old age. In the United States, the story is that we now have about three workers for each retiree. In 20 years' time, this ratio is supposed to drop to 2:1. In countries like Germany and Japan, the decline is somewhat greater, since they have lower birth rates, and in the case of Japan, less immigration. They also have somewhat more rapid gains in longevity.