Handbooks of Research on Public Policy series
Chapter 6: On the mechanical contributions of ageing to global income inequality
Studies of ageing have explored its impact on national economies, but few examine these implications at the global level. National trends in ageing have diverged in recent decades as part of a broader demographic divergence. World fertility since the 1960s has combined with lower mortality to alter the size, growth and age structure of the world population. Trends have varied across world regions in ways that concentrated demographic growth in developing countries and ageing in more developed countries (UNFPA 2009). One question is whether such demographic divergence begets economic divergence as well. In the last half-century, the gap in the share of old population between higher-and lower-income countries doubled from 5.9 percentage points in 1960 to 12.2 in 2010. In high-income countries, the share of population aged 65 and older increased from 8.9 per cent in 1960 to 15.8 in 2010. The change in low-income countries was much smaller, from 3 per cent in 1960 to roughly 3.6 per cent in 2010 (World Bank 2012). Over the same period, the cross-country gaps in GDP per capita narrowed. Between 1980 and 2008, world inequality in GDP per capita (as measured by the Theil Index) fell by 30 per cent, from 0.80 to 0.57. The trend is robust across measures, whether the Gini (a 14 per cent decline from 0.66 to 0.57) or the Mean Logarithmic Deviation (a 40 per cent decline from 1.02 to 0.60) (Kandiwa 2011).
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