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“Towards a Longevity Dividend” is an economic rese “Towards a Longevity Dividend” is an economic research report from the International Longevity Centre–UK (ILC-UK) analyzing how rising life expectancy boosts productivity and economic output in developed countries. Using OECD data from 35 nations (1970–2015), the report provides robust statistical evidence that increases in life expectancy generate significant economic gains, improve workforce quality, and act as a powerful engine for long-term prosperity.
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The central message is clear:
Longer, healthier lives are not a financial burden—they are a major economic asset.
This is known as the “longevity dividend.”
Core Findings
1. Life Expectancy Strongly Raises Productivity
Across all models—GDP per hour worked, per worker, and per capita—life expectancy is the strongest and most consistent predictor of productivity growth.
Key results:
Higher life expectancy → higher output per worker
Higher life expectancy → higher output per hour
Higher life expectancy → higher GDP per capita
These findings remain robust even after controlling for:
youth dependency ratios
old-age dependency ratios
country-specific factors
time trends
endogeneity problems
Life expectancy is more influential than age structure itself in predicting productivity.
2. Life Expectancy Causes (not simply correlates with) Higher Output
Because life expectancy and productivity can influence each other, the report uses advanced econometric tools:
Instrumental variables (IV)
Long time lags (5, 10, 20-year lagged values)
Childhood vaccination rates (for DTP vaccines) as an external instrument
The positive effect of life expectancy on productivity remains statistically significant across all methods, confirming causality, not coincidence.
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3. Education Is the Main Mechanism Behind the Longevity Dividend
The report identifies education as the most important channel through which longer lives raise productivity.
Why?
If people expect to live longer, the return on education increases.
Families invest more in schooling.
Healthier children learn better.
A more educated workforce increases national productivity.
The study shows that rising life expectancy significantly increases tertiary-education attainment, far more reliably than it increases employment rates.
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4. Employment Effects Are Emerging but Historically Suppressed
The link between life expectancy and employment has been historically masked because:
Many countries encouraged early retirement (age 60–65 was standard).
Defined-benefit pensions incentivized workers to leave the workforce earlier.
Mandatory retirement ages kept healthy older adults out of the labor force.
Since the early 2000s, policy shifts—raising pension ages and ending early retirement incentives—have re-coupled life expectancy with employment.
Today, the evidence suggests that longer life expectancy can lead to extended working lives. For example:
Iceland shows 83% employment for ages 60–64, vs. 48.9% OECD average.
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Why Rising Life Expectancy Boosts the Economy
The report synthesizes economic theory to explain this effect:
1. Healthier workers are more productive
They work more efficiently, take fewer sick days, and stay productive longer.
2. Longer life increases the incentive to invest in education
If a child is expected to live to 80 instead of 40, the payoff of education is dramatically higher.
3. Parents choose fewer children
Longer life shifts resource allocation from “quantity” to “quality” of children, increasing human capital.
4. Longer lives increase savings and investment
Higher savings stimulate economic growth through capital accumulation.
Broader Implications
The report argues that:
Health spending should be seen as economic investment, not cost.
Raising life expectancy boosts tax revenues in the long run.
Countries ignoring health and longevity gains underestimate their economic potential.
This challenges public narratives that aging populations are purely an economic burden.
Conclusion
“Towards a Longevity Dividend” demonstrates that increasing life expectancy is a major economic opportunity. It raises productivity, strengthens human capital, and improves growth prospects across developed countries. The report urges policymakers to recognize that improving national health generates powerful fiscal and productivity benefits.
The overarching insight:
Healthy longevity is not just good for people it's good for economies.
It creates a true “longevity dividend.”... |