We recently highlighted data about the changing demographic make-up of the U.S., and the issue of what that means for the economy and stock market. Now, a new study shows that it may mean quite a bit — if history repeats itself.

The study — “Demographic Changes, Financial Markets, and the Economy” — was performed by Rob Arnott and Denis Chaves of Research Affiliates. Looking at historical data from 175 or so countries (with a focus on about two dozen of those) over the past 60 years, they find that:

• Children are not immediately helpful to GDP, and may contribute negatively to stock and bond returns, as parents are likely disinvesting to pay their support;
• Young adults (age 15-49) are the sources of innovation and entrepreneurial spirit, and thus are the driving force in GDP growth; but their impact on stocks and bonds is muted as they are not yet investing;
• Stocks perform best when the roster of people age 35–59 is particularly large, and when the roster of people age 45–64 is fast-growing;

• Bonds follow a similar pattern, with an age-shift: they’re best when the roster of people age 50–69 is growing quickly;
• Senior citizens contribute to neither GDP growth nor stock and bond market returns, as they disinvest to buy goods and services that they no longer produce.

Arnott and Chaves also provide projections for several countries for future economic growth and stock and bond returns based on demographic trends, though they caution that such forecasts are “dangerous”.