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Economics

Aug 21, 2026 Andrew J. Scott

Governments and economists have long viewed demographic aging as a threat to economic growth. But new research finds that labor scarcity encourages investment and shifts innovation toward labor-saving technologies, boosting productivity enough to offset a shrinking workforce.

OXFORD—The global demographic transition, characterized by declining birth rates and rising life expectancy, has been one of the most consequential transformations of the past century, with population aging fueling a steady stream of gloomy economic forecasts. If academic economists, international organizations, and national governments agree on just one thing, it is that an aging society inevitably leads to economic sclerosis.