Academic journal article Monthly Labor Review

Boomers and the Economy's Future

Academic journal article Monthly Labor Review

Boomers and the Economy's Future

Article excerpt

As more baby, boomers become eligible for retirement, what effects will this have on the U.S. economy? Kevin Kliesen, an economist at the Federal Reserve Bank of St. Louis, considers this topic in a recent issue of the Bank's quarterly periodical, The Regional Economist.

Kliesen uses a standard growth accounting framework to estimate how gross domestic product (GDP) growth can be expected to change as the baby-boom generation--born between 1946 and 1964--heads towards retirement. This framework combines three factors: projected population growth, a projection of labor force participation growth, and projected productivity growth. Adding these up fields an estimate of future real GDP growth.

Population projections cited by Kliesen show a slowing of the rate of adult population growth from 1.2 percent per year in the 1990-2006 period to 0.9 percent in the 2007-2017 period and 0.8 percent in the 2018-2028 period. The labor force participation rate dropped slightly from 1990 to 2006; projections suggest a more rapid drop in labor force participation between 2007 and 2017, and an even faster decline between 2018 and 2028. …

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