Aruba’s Demographics and Its Potential Impact on the Labor Market and Output

Selected Issues Papers, December 30, 2025

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Historically, Aruba benefited from population growth that expanded the labor force, boosting productivity and fostering economic growth (the “demographic dividend”).
Recent trends show declining fertility rates and a rapidly aging population that are altering the balance between the economically active working population and those dependent on them.
The study analyzes recent demographic trends and their potential impact on the labor markets and medium-term growth.
The analysis emphasizes how shifts in population structure can create bottlenecks for further growth unless addressed by policy.

Declining fertility and rapid population aging are projected to reduce the expansion of the labor force that supported past productivity gains.
These demographic shifts are assessed as having material implications for medium-term potential output and labor market dynamics.
The study identifies risks to sustaining previous growth trajectories without adjustments to labor supply and participation.

Policies aimed at increasing labor force participation (LFP) are highlighted as central to offsetting demographic pressures.
Measures to reduce bottlenecks on further growth are discussed, with emphasis on labor market reforms and participation-enhancing strategies.
The study considers targeted interventions to raise participation among underrepresented groups (implicit in the subject tags: Gender; Women).