Demographic Transitions and Economic Inequality

Demographic transitions describe the shift from high fertility and mortality rates to low fertility and mortality rates, resulting in an ageing population and altered age structures. As societies progress through these transitions, the relative size of working-age cohorts shrinks while the proportions of dependants—children and retirees—increase. This shift exerts pressure on labour markets, social protection systems and public finances, and it reshapes patterns of wealth accumulation and consumption. Economic inequality is both a driver and an outcome of demographic change, since disparities in income, education and health influence fertility decisions, migration flows and intergenerational mobility. At the same time, evolving public and private transfer mechanisms—pensions, healthcare, familial support and taxation—mediate the distribution of resources across age groups and socioeconomic strata. Understanding how demographic and economic forces intersect is crucial for designing policies that foster sustainable growth, intergenerational equity and social cohesion in a world marked by diverging population trajectories and widening inequality gaps.

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Demographic Transitions and Economic Inequality publication trend

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Technical terms

Demographic transition: The process by which a society moves from high birth and death rates to low birth and death rates, resulting in an ageing population and changing age composition.

National Transfer Accounts (NTA): A framework for measuring age-specific economic flows, including labour income, consumption and public and private transfers, to assess intergenerational resource reallocations.

Life-cycle transfers: The redistribution of resources across different stages of life, encompassing public pensions, healthcare, familial support and taxation, to smooth consumption over the life span.

Economic support ratio: The effective ratio of aggregated labour income of the working-age population to the consumption needs of all age groups, indicating the demographic burden on productive cohorts.

References

1. Six Ways Population Change Will Affect the Global Economy. Population and Development Review (2022).
2. The effect of educational expansion and family change on the sustainability of public and private transfers. The Journal of the Economics of Ageing (2023).
3. The Impact of Demographic and Economic Change on the Australian Generational Economy: Financial Sustainability, Intergenerational Inequality, and Material Living Standards. Frontiers in Public Health (2022).