Two older adults and a young adult (Photo: Thinkstock)

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The graying of America will not only strain programs likeMedicare and Social Security and shrink the pool ofexperienced, productive workers but also slow economic growth becauseyounger people caring for senior family members will be working less as a result.

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That is the finding of a new working paper from the NationalBureau of Economic Research, written by Finn Kydland, economicsprofessor at the University of California, SantaBarbara, and Nick Pretnar, a Ph.D. student in economics at CarnegieMellon's Tepper School of Business.

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The economists project that the effects  of caregiving,and the reduction in the percentage of the population in theworkforce, will cut the nation's economic output 17% by 2056 —and 39% by 2096 — assuming a constant populationdistribution.

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On a more positive note, the research finds that economic outputwould increase 5.4%, if diseases like Alzheimer's and dementiaaffecting the older population were cured.

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The authors cite estimates by the Alzheimer's Association that17 billion hours of unpaid care were provided by relatives toseniors with the disease in 2010, and over 90% of peoplewith Alzheimer's or dementia received informal care in addition tothe care provided by professional hospice services.

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“As the population ages and Alzheimer's and dementia prevalencesincreases, it is reasonable  to expect that the quantityof informal care provided by working-age adults to elderly adultswill increase,” according to the paper.

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The authors recommend that policymakers consider how thepopulation age distribution affects the country's economicperformance when they propose policy changes to counteractstagnating growth. Moreover, they note that curing Alzheimer'sdisease and other forms of dementia would provide only a modestboost.

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“Aging appears to have broad impacts on long-run GDP growth,regardless of old-age disease risk,” the authors warn.

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According to Census Bureau projections, roughly 17% of the U.S.population will be 65 or older by 2020, rising to 20.6% in 2030 and21.4% in 2035.

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At the same time, the percentage of adults between ages 25 and44 will fall slightly from 26.6% of the population in 2030 to 26.1%in 2035 after increasing from 24.3% in 2020.

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By 2035, the bureau expects the number of Americans65 and older will top the number of Americans under theage of 18 for the first time in history, reaching 78million versus 76.7 million.

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As a result of the aging of America, the Census Bureau alsoforecasts that the number of working-age adults will fall from 3.5for every retiree in 2020 to 2.5 by 2060.

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A copy of the paper is available online, behind a paywall,here.

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READ MORE:

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How to keep older workers safe and productive onthe job

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10 ways you can help employees prepare forretirement

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Older women workers face tougheconomics

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