Why is it that our economy still struggles amid the great advances in healthcare and education? As our society ages, it poses significant challenges to our economy. For instance, as the ageing population increases, the working population falls. This results in a fall in productivity, affecting the output produced in the economy. As exports begin to fall, the country's international competitiveness reduces. This would be of a greater effect if other countries have a dynamic workforce, quickly adaptable to changes in consumer demand. 

Falling labor productivity can further lead to issues such as a decrease in the GDP growth rate. Studies show a 10% increase in the fraction of the population aged 60+ decreases the growth rate of GDP per capita by 5.5% 

The current workforce in a country with an ageing population, however, gets the brunt end of the stick. Through a greater portion of tax revenue being spent on pensions, and public transfers such as health care and long-term care, the strain on the working population consecutively rises. Given that demand for healthcare rises with age, countries with aging populations must allocate more money and resources to their healthcare systems. So where does the revenue earned by the government go? As greater amounts are invested into different aspects of the economy, mainly spent on the needs of the older population now, it leads to an opportunity cost. This includes a better-skilled workforce from greater investments in education. 

Although it is argued the scarcity of workers would lead to an increase in wages, a greater financial burden is imposed on the working population from higher tax rates, leading to lower disposable income. With an increase in wages, comes a rise in the unemployment rate. Due to these factors, overall spendings and living standards drop by a modest amount. The elasticity of demand for labor supply can further influence the impact of increased payroll taxation. Therefore, as a result, most of the burden of increased taxation is borne by workers in the long run, whether it's imposed on employers or employees.

Two factors that can moderate the relationship between population age structure and the economy are technology adoption by older people and education levels. The use of new technologies can offset some of the declines in growth and productivity that come with ageing among workers. Studies show technology adoption adds up to an estimated 5 additional years of productive labor. 

Although ageing population limits manual labor from an older workforce, higher education can allow certain traits to counter these difficulties. From greater training and experience to a wider network built over time, an older workforce can still come to a benefit