There are two long-term forces that are driving global population aging. The first is that people are living longer due to medical advancements. The second centers on the fact that birth rates around the world have fallen sharply. Developed economies have seen the working-age share shrink from 67 percent in 2000 to 63 percent in 2025. This is seen to hit 57 percent by 2075. Emerging markets are near their peak at about 66 percent, but this is seen to decline in the coming decades.
Rethinking the Risks of Global Population Aging: Insights From Goldman Sachs Analysts
Background
Several economists have warned that a falling working-age ratio in a particular population will increase dependency, reduce employment rates, and slow economic growth. Yet this outlook risks overlooking one major positive centered on the fact that rising life expectancy reflects profound health improvements. A 70-year-old person in 2022 had cognitive abilities matching a 53-year-old in 2000. Longevity gains have added both more and better years.
Goldman Sachs analysts J. Hatzius, J. Briggs, K. Daly, J. Allen, S. Dong, and M. Peters presented a big-picture thesis in their May 2025 white paper. They argued that population aging, long considered to be a demographic time bomb, might not be the economic threat most people fear. Longer and healthier lives, as well as rising effective working lives, mean aging could be manageable or even beneficial for the global economy rather than a drag.
The supposed economic burden of population aging may also be overstated. Specifically, while public pension costs can rise, the main factor in maintaining healthy dependency ratios is extending working lives. Median life expectancy in developed markets has grown 5 percent since 2000, but average effective working lives have risen 12 percent from 34 to 38 years. This development boosts employment shares despite demographic headwinds.
Trends and Drivers
Note that the aforesaid shift is occurring largely without sweeping pension reforms. This is indicative of a natural or organic adaptation. People are working longer because they are healthier, work has become less physically taxing, and social norms have evolved. In fact, developed market dependency ratios have improved even as the working-age share declined, showing that extended working lives can meaningfully offset demographic pressures.
Emerging markets face a different direction. To be particular, while they currently relish favorable age structures in their populations, they too will age over the next half-century. The transition could be smoother if they invest in education, healthcare, and skill development now, enabling future older workers to remain productive or in the workforce for longer. These investments can turn potential aging headwinds into critical and sustained economic growth drivers.
Technology also plays an emerging and important role in easing the effects of an aging population and declining birth rates. Automation and artificial intelligence systems can help maintain productivity as workforces shrink. Telework and flexible arrangements also make it easier for older adults to remain employed. This combination of healthier workers and supportive technologies could further diminish the economic risks of population aging.
Implications
Shifts in industry composition may accelerate the adaptations discussed above. Economies are moving toward service-oriented and knowledge-based sectors. These sectors consider experience and institutional knowledge important assets. Moreover, in such environments, older workers can remain competitive for longer, thus reducing the urgency to replace them. This gradual structural change aligns well with the demographic realities of the 21st century.
The implications are significant. Instead of a looming demographic time bomb, aging populations both in developed economies and emerging markets may be a manageable transition. Longer and healthier lives mean more productive years. This can support economic stability. Aging emerges as a less concerning threat or risk and even a possible economic asset compared with daunting global challenges like climate change and geopolitical instability.
A look into the data reveals a consistent narrative. As life expectancy and health span improve, economies are adjusting through longer careers, shifting industries, and technology adoption. While challenges remain, the feared economic collapse from population aging is overstated. With proactive investment and adaptation, global aging can transform from a perceived liability into a foundation for resilience, productivity, and sustained prosperity.
FURTHER READING AND REFERENCE
- Hatzius, J., Briggs, J., Daly, K., Allen, J., Dong, S., and Peters, M. 20 May 2025. “The Path to 2075—The Positive Story of Global Aging.” Global Economics Analyst. Goldman Sachs. Available via PDF