The working age population of the existing centers of global economic activity has stopped rising and begun to fall. All else equal (including in particular productivity growth and labor force participation), the implied slowdown in the global labor force could subtract a full percentage point from trend growth in the coming decade and a half, compared with the past 15 years.



But the effect of shrinking (and aging) populations on the global workforce could be mitigated by labor force participation of workers beyond the conventional working age (15-64) and by increased participation rates of the working age population. In the past decade, precisely this has happened in Japan and Germany, substantially mitigating the demographic shock.



In Japan, the most important drivers have been a high (and rising) participation rate of older workers and a substantial increase in participation by women in their prime working years (25-54). Female labor force participation in this age group now exceeds that of the US.



In Germany, the most important driver has been a sharp rise in labor force participation of the population near retirement age (55-64 years), from only 52% in 2005 to nearly 70% in 2014. It seems plausible that this is a response to the Hartz reforms of 2002-2005.



The US stands out as the only one of the countries in which participation of the prime working age population has declined. Adjusted for demography, the US participation rate is the lowest of the countries considered.