Dimitrios Tsiamagkas, PhD Candidate, Department of Economics, National and Kapodistrian University of Athens, Email: dtsiam@econ.uoa.gr

Kyriaki I. Kafka, Assist. Professor, Department of Economic and Regional Development, Panteion University of Social and Political Sciences, Email: kkafka@panteion.gr

Pantelis C. Kostis, Assist. Professor, Department of Economics, National and Kapodistrian University of Athens, Email: pkostis@econ.uoa.gr

Abstract

Modern economic analysis traditionally approaches the demographic transition of developed economies through a strictly quantitative and actuarial perspective, focusing almost exclusively on the shrinking labor force, the aging population, and the consequent fiscal pressures on public insurance systems. This paper introduces a radically different conceptual reading, suggesting that demographic changes act as a fundamental, endogenous source of macroeconomic uncertainty, which mediates and reshapes the final impact of the demographic shock on long-term economic growth rates. Through the application of the systematic literature review (PRISMA) methodology, this study maps the complex mechanisms and transmission channels through which the progressive increase in the old-age dependency ratio is transformed into a tangible policy risk premium. This risk premium distorts the rational expectations of economic agents, inflates precautionary household savings, and compresses current aggregate demand, creating a dynamic that can undermine the very productive base of the economy. To achieve a comprehensive conceptual synthesis, the existing literature is systematically organized and classified around four central axes, which include the dynamic relationship between aging and uncertainty, the regulatory role of institutions and culture, the microeconomic behavioral responses of individuals, and finally, the overall macroeconomic growth outcomes. This mapping demonstrates that the long-term consequences of the demographic phenomenon are not predetermined, but are directly dependent on the institutional resilience of societies. The quality of formal institutions decisively determines whether the resulting uncertainty will lead to productive stagnation or whether it will be effectively absorbed through the emergence of older age groups as active and adaptable economic agents. On the contrary, the existence of institutional instability and the pervasive risk of delaying the necessary structural reforms heighten expectations of pension-system unsustainability. The literature suggests this can act as an incentive for premature labor-market exit, which further limits the available productive potential and undermines the original objectives of any corrective policies. The main theoretical contribution of the paper lies in the emergence of two important but assumed channels in the economic literature to date. The first channel concerns the regulatory role of informal institutions and culture, such as social trust, long-term time orientation, and the degree of uncertainty avoidance, which act as stabilizing mechanisms in the face of demographic shocks. The second channel concerns the differentiated structural response of businesses, which respond to the decline in labor supply and uncertainty by accelerating investment in automation. By shifting the focus from mechanistic, linear actuarial projections to an integrated institutional and behavioral framework, this study not only offers a new theoretical perspective, but also formulates a rigorously structured research agenda. This agenda lays the theoretical foundations and guidelines for the future empirical and econometric investigation of these two channels, while providing economic policymakers with the necessary analytical tools to safeguard long-term growth dynamics.

Keywords: Demographic aging, institutional resilience, macroeconomic uncertainty, precautionary savings, economic growth, culture.

JEL Classification: D80, E21, J11, O43, Z1.