Although population aging is one of the best foreseeable phenomena with far reaching consequences for labor markets and production, there are only few studies concerning the relationship of age and productivity. Axel Börsch-Supan, Matthias Weiss and Ismail Düzgün evaluate the state of research interdisciplinarily.
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According to the lifecycle theory of consumption and savings, households de-cumulate their asset holdings during retirement. In an aging society this effect leads to a decrease of aggregate household savings. Two developments additionally accelerate this process. First, in aging societies, the rate of return to capital goes down which may further decrease retirement savings. Second, the retirement of the baby boomers will speed up this process. Pessimists therefore forecast a massive decline of household demand for financial assets, as well as a decline in capital returns and a massive meltdown of wealth to occur when the baby boomers retire. This financial horror scenario, also known as the "Asset Meltdown Hypothesis", has been challenged by Axel Börsch-Supan, Alexander Ludwig and Joachim Winter.
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