of relevant skills, skill shortages may lead firms to automate production processes to a higher degree, which could instead lead to job destruction across generations.<sup>7</sup>

**Supporting productive longevity can also help individuals increase their healthy years of living.** At the individual level, there is substantial evidence that working in older age, in the right circumstances, can create a virtuous circle of healthy living and productive work. Research focused on high-income countries (HICs) shows that opportunities for voluntary part-time paid work, as well as volunteering activities, can contribute to strengthening physical and mental health at older age, including for people over 80 years of age.<sup>8</sup> The Gallup World Poll shows that working full-time or voluntarily part-time in older age, as opposed to being retired, is correlated with higher levels of reported happiness.<sup>9</sup>

**Policies focusing on productive longevity are part of a broad policy agenda addressing aging and welfare challenges** . First, actions across many different policy areas will be needed to boost growth, inclusive job opportunities, and social protection, while managing macroeconomic and fiscal conditions. These include policies relating to education and life-long learning, health and care systems, labor migration and labor market regulations, social protection systems, taxation policy, innovation policy, and more. Second, policies also need to target all generations: promote longer working lives for those able to work productively, invest in younger generations to raise productivity over entire working lives, and enhance social protection for those who can no longer work. This is particularly the case in L/MICs, where human capital levels are lower and intergenerational human capital gaps across generations larger, compared to HICs. Investing at scale in low-productivity mature workers would likely be very costly compared to investing in children and youth. Today’s adults are tomorrow’s elderly, and early investment in skills development is associated with a strong positive impact on health, which in turn contributes to later retirement.<sup>10</sup>

**While recognizing the need for broad policy packages, the paper is focused on policies that enable and incentivize older workers in L/MICs to remain active, and that can raise the productivity of their work further** . As will be discussed in more detail below, in L/MICs, many older people, often even the majority, work for themselves or their families in the informal sector, in low-productivity employment and without social security. Raising their productivity and providing protection are critical challenges. Given largely underdeveloped social protection systems in low-income countries (LICs) and many middle-income countries (MICs), policies relating to taxation, labor regulations, and formal social protection programs have limited reach. For the group of relatively better-off workers, often in the formal sector, different labor market policies and social security system incentives and barriers can matter, however. A focus on this group is likely to yield greater results for this set of policies, as it is arguably less expensive and easier to extend working lives than renew or start working lives at mature ages, particularly after a long period of absence from the labor market. In what follows, we will refer to “mature workers” approaching retirement as the target age group.

**There are specific growth and employment opportunities associated with aging** . Low aggregate labor demand in the formal sector, including for older workers, is often a critical problem to productive employment growth in many L/MICs. Aggregate demand-side constraints limit the reach of supplyside policies aiming at incentivizing productive employment, for older workers and others. This said,

> 7 Acemoglu and Restrepo 2022.

> 8 Staudinger et al. 2016.

> 9 https://www.brookings.edu/blog/up-front/2014/03/28/why-aging-and-working-makes-us-happy-in-4-charts/

> 10 Allel et al. (2021) show that, in Mexico, more access to formal education during childhood and adolescence is associated with a long-term positive effect on health and later retirement.

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