More age, less growth? Secular stagnation and societal ageing

Abstract

PurposeThe aim of the study is to demonstrate evidence that societal ageing and poor economic growth are linked in the advanced economies. It challenges the claim however that secular stagnation represents a serious problem for future prosperity.Design/methodology/approachThis paper critically reviews recent formulations of the secular stagnation hypothesis concerning stalled economic growth in the advanced economies and the links between demographic ageing and economic slowdown. It outlines both trends (of ageing and stalled growth) and reviews some of the key empirical studies that have sought to determine the role played by demographic change in accounting for the relative lack of growth in the advanced economies.FindingsThe advanced economies are ageing and their economic growth is slowing, although a causal link between these two phenomena remains unproven. However, even if no direct causal link can be drawn between these two processes the focus upon the impact of societal ageing serves as a stimulus to re-think the nature of future growth in our increasingly ageing and unequal societies.Research limitations/implicationsWhile the measurement of demographic trends is relatively straightforward, there are more problems in specifying the exact parameters of macroeconomic growth. This makes empirical studies in the area difficult to interpret. However studies in this area have value in widening thinking about the role of ageing and the nature of growth in the future.Practical implicationsRather than fearing the prospect of an age related slowdown in the rate of growth in the advanced economies, these developments offer opportunities to focus upon redistribution more than growth, while supporting a programme of growth with equity in the world's developing economies.Social implicationsWhile a demographically over-determined model of the secular stagnation hypothesis is dubious, the future ageing of the advanced economies is certainly a challenge. It is also an opportunity for rethinking ideas about ageing, growth and development. Adopting such a more nuanced perspective offers a counter-narrative to the demographic catastrophising that is often evident when discussing 'societal ageing'. It also suggests the value of shifting the perspective of seeking ever increasing growth toward a greater focus upon redistribution, between and within the generations.Originality/valueThere has been very little engagement with the secular stagnation hypothesis outside economics. Behind its macroeconomic formulation, however, lie assumptions about the ageing of society that can easily become examples of unwarranted demographic catastrophising. By bringing this topic to the attention of the social sciences, the paper can serve as a stimulus for rethinking both ageing and growth.