The Impact of Health and Education on Labor Force Participation in Aging Societies: Projections for the United States and Germany from Dynamic Microsimulations

Abstract

We project the labor force in the United States to 2060 and contrast the outcomes with comparative projections for Germany. In both countries, the population will age, but the demographic dynamics are fundamentally different. According to our dynamic microsimulations, the labor force in the U.S. will increase by 17 percent between 2020 and 2060 (about 29 million workers) despite population aging. In contrast, the labor force in Germany will decline by 11 percent (about 4.5 million workers). Our baseline projections indicate that an expansion of education will increase the labor force by about 3 million persons in the United States and about half a million persons in Germany by 2060. In several what-if scenarios, we examine the effects of further expanding education and of removing health barriers on labor force participation. Higher educational attainment among those with currently low education has the largest impact on labor force participation, relative to the additional years of schooling. However, health improvements and the labor market integration of people with health limitations suggest a larger increase in labor force participation rates. Using Sweden as a benchmark, we show that reducing the health participation gap would increase the U.S. labor force by as much as 13 million people in 2060 (+6.8 percent compared to our baseline).

Unlocking Workplace Brain Health to Fuel Prosperity and Healthy Longevity

“…The declining health of the population, particularly in these underemployed groups, has contributed to the constricted labor pool and wage gaps. 5,6 While life expectancy has risen, today we spend more time in absolute terms in poor health than we have at any other point in history. On average, people spend about 50% of their lives in less-than-good health.…”

“…Closing the U.S. health-related participation gap (the difference in employment rates between individuals affected by health-related issues and those not similarly affected) holds the potential to significantly augment the U.S. labor force by approximately 13 million individuals by the year 2060. 6 Mitigating health-related barriers that hinder workforce participation-such as chronic illnesses, disabilities, and mental health conditions-would enable many to join or rejoin the workforce, contributing substantially to economic growth, productivity, and overall societal well-being. 16 Those most impacted by the health participation gap include minority groups, low-income communities, individuals with disabilities, and older adults.…”

Maintaining Brain Health: An Imperative for Successful Aging and Business Performance

“…The declining health of the population, particularly in these underemployed groups, has contributed to the constricted labor pool and wage gaps. 5,6 While life expectancy has risen, today we spend more time in absolute terms in poor health than we have at any other point in history. On average, people spend about 50% of their lives in less-than-good health.…”

“…Closing the U.S. health-related participation gap (the difference in employment rates between individuals affected by health-related issues and those not similarly affected) holds the potential to significantly augment the U.S. labor force by approximately 13 million individuals by the year 2060. 6 Mitigating health-related barriers that hinder workforce participation—such as chronic illnesses, disabilities, and mental health conditions—would enable many to join or rejoin the workforce, contributing substantially to economic growth, productivity, and overall societal well-being. 16 Those most impacted by the health participation gap include minority groups, low-income communities, individuals with disabilities, and older adults.…”