Ageing dynamics of human-capital-specific population: A demographic perspective

BACKGROUND: Research on how rising human capital affects the consequences of population ageing rarely considers the fact that the human capital of the elderly population is composed in a specific way that is shaped by their earlier schooling and work experience. For an elderly population of a fixed size and age-sex composition, this entails that the higher its human capital, the greater the total amount of public pensions to be paid. OBJECTIVE: The main purpose of this paper is to analyse the link between human capital and retiree benefits and its effect on population ageing from a demographic viewpoint. METHODS: We construct an old age dependency ratio (OADR), in which each person, whether in the numerator or the denominator, is assigned the number of units corresponding to his/her level of human capital. Based on data for Italy, we study the dynamics of this human-capital-specific OADR with the help of multistate population projections to 2107. RESULTS: Our results show that under specific conditions a constant or moderately growing human capital may aggravate the consequences of population ageing rather than alleviate them. CONCLUSIONS: With those findings, the authors would like to stimulate the debate on the search for demographic and/or socio-economic solutions to the challenges posed by population ageing.