The Future of Infrastructure in Aging Economies: Costs, Challenges, and Innovations

Birth rates are declining below the sustainable birth rate throughout the developed world. Even in many developing countries birth rates are declining. As a result, the United Nations is predicting a reduction in populations for the developed world. This will have both negative and positive future consequences for these countries. For instance, by the year 2100, the following six countries will see a more than 40% decrease in their population under the age of 75. These countries are (in order of the greatest decrease) South Korea, Japan, Greece, Italy, Portugal, and Spain.As populations decline, the workforce will age. This paper will focus on just one unique negative consequence of an aging labor force and that is an increase in the future infrastructure maintenance cost per capita. Using a panel regression on 23 OECD countries between the years 2005 through 2020, this paper looks at the impact of an aging workforce on infrastructure maintenance cost per capita of rail lines. Although this paper examines in detail an aging workforce regarding rail line maintenance, this analysis can be applied to similar types of infrastructure known as ‘network type’ infrastructure such as roads, bridges, tunnels, etc.