Healthy Aging Fuels Growth: How Better Health in Later Life Boosts Work and Prosperity

The IMF paper “The Labor Market Implications of Healthy Aging” finds that as people live longer in better physical and cognitive health, they remain in the workforce longer and more productively. It concludes that healthy aging can transform the economic challenge of aging populations into a powerful source of growth and resilience.

The IMF Working Paper “The Labor Market Implications of Healthy Aging”, authored by Bertrand Gruss, Eric Huang, Andresa Lagerborg, Diaa Noureldin, and Galip Kemal Ozhan, is a collaborative effort between the International Monetary Fund’s Research Department, the University of Cambridge, and the Institute for Fiscal Studies. Published in November 2025, it explores how improving health among older adults is reshaping global labor markets. Drawing on data from 41 countries between 2000 and 2022, the paper presents convincing evidence that as people age in better physical, cognitive, and mental health, they remain in the workforce longer and perform more productively. The authors argue that the growing share of life years spent in good health could offset many of the negative economic consequences of population aging.

Healthy Aging as an Economic Opportunity

Population aging is typically framed as a threat to growth and fiscal stability, with fewer workers supporting more retirees. However, this research paints a more optimistic picture. Using harmonized longitudinal data from the Health and Retirement Study (HRS), the English Longitudinal Study of Ageing (ELSA), and the Survey of Health, Ageing and Retirement in Europe (SHARE), the authors find that 83 percent of the global increase in life expectancy since 2000 corresponds to years lived in good health. This trend, termed healthy aging, means people are not just living longer but remaining capable and productive for longer. If sustained, these improvements could counterbalance the “demographic drag” of aging societies by expanding the effective labor supply and supporting economic growth.

From Data to Discovery: How Health Drives Work

The study draws on more than half a million individuals aged fifty and above, assessing their physical strength, cognitive ability, psychological well-being, and frailty. Labor outcomes such as employment status, hours worked, and earnings are then analyzed through a rigorous two-stage least squares model that isolates health as a causal driver of work participation. The findings are striking: today’s seventy-year-olds perform cognitively like fifty-three-year-olds did two decades ago. A ten-year improvement in cognitive health increases older workers’ labor force participation by 20 percentage points, adds six working hours per week, raises productivity by 30 percent, and boosts total earnings by 35 percent. Healthier aging thus extends both the quantity and quality of working life, turning longevity into an economic advantage rather than a burden.

The Power, and Inequality, of Cognitive Health

Among all health dimensions, cognitive performance emerges as the strongest predictor of labor market success. Individuals with better memory, reasoning, and adaptability can remain productive longer, especially in service and technology-driven sectors. Yet, the paper highlights growing inequality in these benefits. Workers with higher education and income experience larger health and employment gains, while those in physically demanding jobs face earlier health deterioration and shorter careers. This divergence reflects structural inequalities; manual laborers tend to age biologically faster due to job strain and limited access to healthcare. Without targeted interventions, such gaps could widen, leaving segments of the population unable to benefit fully from longevity gains. The authors argue for lifelong learning, workplace redesign, and proactive health policies to bridge these divides and ensure that healthy aging enhances inclusivity as well as productivity.

Turning Longevity into a Growth Dividend

Across countries, the results are consistent. Advanced economies show steady improvements in both health and labor participation among older adults, while emerging economies, especially in Asia and Latin America, demonstrate faster relative gains despite starting from lower health baselines. The study’s robustness checks confirm that these patterns hold across various definitions of health and work. The policy implications are both urgent and encouraging. If governments invest in preventive health care, cognitive wellness, and labor market flexibility, population aging could cease to be a fiscal risk and instead become a source of growth. Flexible hours, age-friendly workplace design, and continuous training programs would enable older workers to remain active contributors to the economy.

Aging does not necessarily mean economic decline; it depends on how people age. Healthier, cognitively capable older adults can sustain higher productivity, extend their working lives, and contribute meaningfully to society’s wealth. The authors conclude that healthy aging is perhaps the most underappreciated driver of resilience in modern economies. By investing simultaneously in health, education, and workplace adaptation, societies can transform longer lives from a looming economic liability into a lasting growth dividend, proof that longevity and prosperity can advance hand in hand.