Abstract WP12-01

Andrew Mason and Ronald Lee. 2012. Demographic Dividends and Aging in Lower-Income Countries.

Abstract:

The purpose of this study is to explore the economic implications of changing demographic conditions in lower-income countries. This is done in a comparative way by contrasting lower-income countries with each other and with upper-middle- and high-income countries. The importance of the demographic dividend varies much more in lower-income countries than in upper-middle or high-income countries because of differences in the speed and timing of fertility decline and because of variation in the economic life cycle. Of particular concern is low labor income of young adults in Africa as compared with their counterparts in Asia and Latin America and the Caribbean. The quantity-quality tradeoff is important in lower-income countries and will facilitate a second demographic dividend. Human capital spending, however, is not increasing with fertility decline as rapidly as suggested by cross-sectional data. Although aging may appear to be a relatively remote prospect for lower-income countries, all countries need to address the needs of their older populations by developing sustainable public programs that balance the need for development and economic security for the elderly.