SHAPING THE FUTURE HOW CHANGING DEMOGRAPHICS CAN POWER HUMAN DEVELOPMENT

“When relatively
large generations
reach the prime
ages for working
and saving, a country
will experience
a demographically
induced economic
boost, provided this
demographic cohort
is productively
employed.”
– Bloom et. al. 2010
and scope of demographic shifts, but in all cases,
the three drivers of a changing population play
determining roles.
Transition begins with a fall in mortality,
especially among children, as health care, including
sanitization and hygiene, and nutrition
improve. Initially, this means people have more
children, but eventually, as the prospects of
survival increase, families are motivated to have
fewer children. They are able to devote more
resources to the health, education and overall
well-being of each child, building capabilities
that will equip them to be more productive as
adults (Figure 1.13).
In the middle stage of transition, the share
of the working-age population increases on the
back of past high fertility rates and declining
infant mortality rates. It is high compared to
the shares of the older and younger people who
depend on them. With families becoming smaller,
more women seek paid employment outside
the home. Many young workers move to urban
areas where salaries and living standards are
higher, jobs are more productive, and they can
begin to accumulate savings and other assets.
This process as a whole can accelerate economic
growth and begin to yield a demographic dividend.
46 If it provides decent work and other
FIGURE 1.13:
The broad stages of demographic transition
opportunities accessible to all, growth will be
inclusive and high in quality, and contribute to
human development.
A large share of people in the workforce
can spur tax collection, even as a lower share
of dependents implies fewer social security
expenditures, such as for education and health.
Governments may have the resources and flexibility
to invest in economic sectors linked to
inclusive growth, and to continue investing in
human capabilities, such as through quality education
and improved health care, that advance
and sustain human development, and ensure its
benefits are broadly shared.
Gradually, the median age of the working
population increases. At the middle or close
to the end of their working life, people are
likely to earn and save more, particularly with
fewer children and more women working. The
propensity to save also rises as people plan for
their retirement, which can lead to increased
investment, a positive for economic growth and
the demographic dividend.
The final stage of transition, typically occurring
after many decades, is when ageing sets
in, bringing challenges and opportunities for
individuals, governments and economies. More
people enter retirement. As people tend to live
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