Project Syndicate: The Dangers of Demographic Denial

Too many leaders of emerging economies are counting on sizable numbers of young adults to become consumers and fuel growth. But technological advancements could contribute to high rates of unemployment. The term “demographic dividend” is misunderstood, explains Adair Turner for Project Syndicate. “The term was originally used to describe a transition in which countries enjoyed both a one-off increase in the working age population and a significant fall in fertility,” he writes. “That combination produces a high ratio of workers to dependents – both retirees and children – making it easier for high savings to support sufficient investment to drive rapid growth in capital stock.” A decline in fertility rates theoretically should contribute to parents investing in more education for fewer children and those same children inheriting a greater share of wealth – as has been the case with countries like China. Increased fertility, though, eliminates the dividend with less investment in infrastructure and society, as is the case throughout much of Africa. Information technology and increased automation compound the challenges. Jobs involving predictable physical activity – as in manufacturing – are the most vulnerable. The International Labor Organization estimates that up to 90 percent of low-paid clothing work could be automated. Creating new jobs for young adults with big expectations won’t be easy. – YaleGlobal