As the large working- age cohort that drove the demographic dividend
grows older, however, population aging sets in. An aging population implies a fall in the working- age population that will lead to lower output. Aging also implies that each worker will have to support more and more retirees under public pension and healthcare systems. All in all, while demographic trends in Asia were conducive to economic growth in the
past, they will be markedly less so in the future. Responses to population aging can lead to very different outcomes. People may work longer, workers may increase savings to cover longer life expectancy, or there may be greater investment in human capital that will lead to higher productivity. If, for example, workers accumulate assets in anticipation of living longer, then population aging may possibly lead to a more favorable outcome for the economy. This increase in the demand for capital in response to aging is called the second demographic dividend (Mason and Lee, 2007).
Achieving the second demographic dividend in large part relies on policy. In fact, for Asian policymakers, population aging gives rise to two major objectives that sometimes sharply conflict with each other. The first is to sustain strong economic growth over the next few decades, and the second is to develop social systems that will provide economic securityto a growing number of elderly people. Success in achieving these two