Population aging does not always slow down the economy: unexpected conclusion of Acemoglu’s study

Declining birth rates and an aging population do not necessarily lead to economic stagnation. Worker shortages could accelerate automation and boost productivity.

For decades, demographic aging has been described almost exclusively as a threat: fewer workers, more retirees, rising health care costs, and social insurance systems under increasing pressure.

However, a new study by economists Daron Acemoglu, David Autor, Keelan Byrne and Andrew Scott offers a more complex picture. The authors argue that a shortage of young workers may be forcing companies to invest more heavily in equipment, automation and labor-saving technologies.

Work entitled “Baby Busts and Growth Booms: Demographic Change and the Macroeconomy” published July 2026 in the US National Bureau of Economic Research (NBER) Working Paper Series.

Daron Acemoglua professor at the Massachusetts Institute of Technology, is one of the 2024 Nobel Prize winners in economics.

How the worker shortage is changing the economy

The logic of the study is quite simple. When young workers are plentiful and their labor is relatively inexpensive, companies have less incentive to replace manual labor with machines.

When labor supply declines, businesses face rising wages and difficulty finding staff. Investments in technology then become more economically attractive.

According to the authors, the shortage of workers can lead to the following changes:

• accelerated implementation of automated equipment;
• an increase in the number of patents for technologies that replace manual labor;
• increasing the share of high-tech industries;
• increased investment in equipment and software;
• increasing total factor productivity;
• increasing the volume of products created by one worker.

In other words, companies are beginning to compensate for the lack of people with more productive machines and organizational solutions. Humanity, as usual, discovers the need for modernization only after there are no more people willing to do hard work for a small salary.

What data showed over 70 years

The researchers analyzed the demographic and economic indicators of different countries, as well as changes in local US labor markets in approximately seven decades.

During this time, the global total fertility rate fell from 3.78 births per 100 inhabitants in 1950 up to approximately 1.71 births in 2025.

The authors came to several conclusions:

• countries with lower fertility rates experienced higher GDP growth per person of working age;
• in American local labor markets, the decline in fertility was accompanied by faster growth in wages;
• The total GDP of countries on average did not declinedespite the reduction in the number of employees;
• in countries and regions with a shortage of young workers, more developments in the field of automation were registered;
• economies shifted more actively towards high-tech industries.

The authors found no convincing evidence that the result could be fully explained by increased female employment, increased educational attainment, or the general shift of workers from agriculture to industry.

They consider the main mechanism to be technological response to labor shortages.

What does the 26.8% number really mean?

The most impressive indicator of the study was the estimate that A birth rate that is one percentage point lower is associated with a GDP per person of working age that is approximately 26.8% higher..

However, this figure is easy to misunderstand.

We are not talking about the fact that a decrease in the birth rate by one point immediately increases GDP by 26.8%. The authors compared countries’ fertility levels at the beginning of the study period with cumulative economic growth in subsequent decades, specifically from 1970 to 2020.

Therefore, the indicator reflects long-term statistical relationshipand not an annual increase and not a guaranteed result for each individual country.

In addition, the “GDP per worker” indicator used by researchers actually means GDP per person aged 20 to 70regardless of whether this person was officially employed.

Population aging still remains a problem

The study does not negate the financial and social consequences of the demographic crisis.

Reducing the number of employees still means:

• Fewer tax and insurance premium payers;
• increase in the number of pension recipients;
• increased health and care costs;
• shortage of personnel in medicine, construction, agriculture and services;
• risk of rising inequalityif only capital owners receive benefits from automation;
• contraction of the domestic consumer market.

Earlier, Athens News wrote that Europe’s aging population increases pressure on pension systems: There are fewer and fewer workers financing payments with their contributions.

Thus, productivity growth can mitigate the economic consequences of aging, but does not eliminate the need to reform the pension system, health care and the labor market.

Why the past doesn’t guarantee the same future

The authors explicitly caution that their findings describe past demographic changes. In the coming decades, population decline in some countries may occur much faster than in the historical period considered.

The researchers cite several limitations to their work:

• future aging may be much more dramatic than previously observed;
• the impact of technology is confirmed mainly by indirect indicators;
• business response depends on the availability of capital and the quality of government institutions;
• not every country is able to quickly implement automation;
• The economic impact of new technologies can be distributed extremely unevenly.

In addition, the work was published as NBER preliminary study. Such articles are circulated for discussion and revision and do not undergo routine scientific peer review before publication.

What does this mean for Greece

For Greece, the study’s findings are particularly interesting. The country is simultaneously facing a falling birth rate, a shrinking population, an aging workforce and staff shortages in many industries.

As previously reported “Athens News”the number of births in the country in 2025 is estimated to have fallen below 70 thousand, while the death rate is more than double the birth rate.

However, the automatic formula “fewer workers means more productivity” only works if there is investment.

Greece will need:

• investments in modern equipment and digitalization;
• retraining of older workers;
• development of vocational and technical education;
• access of enterprises to lending;
• incentives for technology adoption in small and medium-sized businesses;
• policies that allow workers to share in the benefits of increased productivity.

The publication has already noted that An aging population is gradually changing the Greek labor marketand companies are forced to create conditions for longer employment of older people.

Editorial comment

The study by Acemoglu and his colleagues does not prove that population decline is an economic good. It shows something else: a shortage of workers can force the economy to break its habit of compensating for low productivity with cheap labor.

For a country with a strong industry, accessible financing and a developed vocational education system, the shortage of personnel can really become an impetus for automation.

For an economy that prefers to fill vacancies with cheap labor, defers investment and operates outdated equipment for years, the result may be the opposite: There will be fewer workers, but technology will not appear.

Therefore, the aging population is not an advantage, but a challenge. It can accelerate modernization, but only if government and business are willing to invest in productivity, education and technology.

Demographics do not give out economic gifts. It only creates pressure, and society decides whether to turn this pressure into innovation or into another crisis.

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