The Aging Society

What are the likely effects of an aging populaton in New Zealand?

Many economists, such as Gareth Morgan, are painting a pretty gloomy picture of New Zealand's economy as the population ages with the retirement of the baby boomer generation. However, the reality could be very mixed, some possible positive effects could be-

Low unemployment- an aging population will reduce competition for jobs and create new jobs in healthcare and domestic services
Higher productivity- a shortage of workers will provide greater incentives for businesses to increase productivity, without increasing unemployment
Decreased pollution- elderly people tend to be more frugal, eat less and drive smaller cars
More equality- labour shortages will drive up wages for manual workers
A happier population- increased equality will reduce feelings of relative deprivation
Lower crime- the elderly commit less crime and have lower rates of drug abuse.

Offsetting these positive changes could be-

Lower Growth- the elderly will spend less and companies won't have enough labour for expansion
Higher Taxes- to pay for pensions and health care
Reduced spending on government services- governments may have to spend less on transport, education and some social services to pay for pensions and elderly healthcare
Inflation- wages may increase excessively as workers perceive their strong bargaining position and unions get greedy. Also, certain products and services may be in short supply.
Economic instability- massive amounts of pension savings chasing after high returns in emerging markets may destabilise the global economy.

Within the workplace the effects of an aging population are alos likely to be very variable. In jobs requiring new technology older workers tend to make more mistakes and are reluctant to work overtime. Younger workers are generally more enthusiastic and hard working in most other professions. However, in white-collar professions older workers are often superior, they tend to have more common sense and have an aversion to hubris and political correctness (valuable qualities in the present era!).

Given that the impact of an aging population is so hard to determine it seems unwise to resort to the radical step of large scale immigration to try and 'solve' the problem. Immigraton can only postpone the inevitablity of an aging population. We should accept that the population is aging and start preparing for it rather than trying to avoid it.