##ing that on average we ’ ll enjoy longer lives, may also encourage a rise in education and training. we may also become more willing to pursue risky, innovative business opportunities at any given age compared with what had been the norm for earlier generations. public policies have an obvious role to play, facilitating these adjustments where possible. the reserve bank can best contribute to the necessary adjustments to population ageing by maintaining low and stable inflation. this does two things. first, it encourages investors and businesses to focus on generating real returns rather than trying to avoid the effects of high inflation. second, it enables changes in relative prices and relative returns to factors of production to be observed more clearly than in a world where inflation is high and variable. and it is these price signals that will facilitate the necessary adjustments in behaviour. bis central bankers ’ speeches

began to retire from around the turn of the century and the baby boom is hilda : the following disclaimer applies to data obtained from the hilda survey. the household, income and labour dynamics in australia ( hilda ) survey was initiated and is funded by the australian government department of social services ( dss ), and is managed by the melbourne institute of applied economic and social research ( melbourne institute ). the findings and views based on these data should not be attributed to either dss or the melbourne institute. see kent, c ( 2014 ), cyclical and structural changes in the labour market, address on labour market developments, hosted by the wall street journal, sydney, 16 june. bis central bankers ’ speeches increasingly putting downward pressure on the share of the population that is of ( traditional ) working age. 3 graph 1 the third force driving population ageing is rising longevity. australians born today can expect to live nearly 25 years longer than those born a hundred years ago. the increase in life expectancy has occurred throughout this period and appears to be ongoing. population ageing – some challenges conversations about ageing often focus on the challenges it poses. but it also provides us with numerous opportunities. let ’ s first consider some of the challenges and assume for the moment that behaviours don ’ t respond to population ageing. 4 ( relatively ) fewer workers if people were to retire at about the same age as in the past, population ageing would drive further falls in labour force participation rates over coming years. by itself, ageing is estimated to have subtracted from the labour force participation rate by between 0. 1 and 0. 2 percentage points per year over the past decade and a half ; this effect has picked up a little in recent years as baby boomers have begun to reach the age of 65 years. see kent ( 2014 ) for details. these challenges, and possible responses to them, have been highlighted by the regular “ intergenerational reports ” since 2002, and by the productivity commission ; see, for example, productivity commission ( 2013 ), “ an ageing australia : preparing for the future ”, research paper, november, available at : < http : / / pc. gov. au / _ _ data / assets / pdf _ file / 0005 / 129749 / ageing - australia. pdf >. bis central bankers ’ speeches the resulting decline in the supply of labour ( relative to the total population ) would tend to put upward pressure on wages ( at least