Pensions for an Aging Population

After presenting the Gruber-Wise analysis showing a strong effect on retirement of implicit taxes from pension rules, it is shown that there is no effect of these implicit taxes on unemployment. This supports the argument for avoiding high implicit taxes on continued work. Also discussed are methods for adjusting benefits and taxes for increases in life expectancy, with particular attention to increasing "the retirement age." Calculations are presented showing the decreases in benefits for an increase in the normal retirement age in the US and the years of service for a full benefit in France.

Geographic Dimensions of Aging in Canada 1991-2001

Although population aging at the national level has received much attention, its geographical dimensions have not. Here we explore the demographic processes which underlie population aging at the provincial and metropolitan scale for the periods 1991-1996 and 1996-2001. A demographic accounting framework is proposed which differentiates between the effects of aging-in-place and net migration on population aging. We also examine the relationships between the various measures of aging and social and economic characteristics of metropolitan areas over the two periods. We demonstrate that the path of population aging is susceptible to social and economic context; in particular, the struggles of the British Columbian economy in the second half of the decade and the deteriorating economies of older resources based communities are associated with increases in population aging over and above the general aging taking place in Canadian society.population aging; geographic differences

Population Aging

Population aging is primarily the result of past declines in fertility, which produced a decades long period in which the ratio of dependents to working age adults was reduced. Rising old-age dependency in many countries represents the inevitable passing of this %u201Cdemographic dividend.%u201D Societies use three methods to transfer resources to people in dependent age groups: government, family, and personal saving. In developed countries, families are predominant in supporting children, while government is the main source of support for the elderly. The most important means by which aging will affect aggregate output is the distortion from taxes to fund PAYGO pensions.

Why Does Population Aging Matter So Much for Asia? Population Aging, Economic Security and Economic Growth in Asia

Asia as a whole is experiencing a rapid demographic transition toward older population structures. Within this broader region-wide trend, there is considerable heterogeneity, with different countries at different stages of the demographic transition. In this paper, we document Asia’s population aging, describe the region’s old-age support systems, and draw out the regional socioeconomic implications of population aging and old-age support systems. Population aging gives rise to two fundamental challenges for the region – (1) developing socioeconomic systems that can provide economic security to the growing number of elderly and (2) sustaining strong growth in the face of aging over the next few decades. Successfully addressing those two challenges will be vital for ensuring Asia’s continued economic success in the medium and long term.

Entitlements: Not Just a Health Care Problem

[Excerpt] “A new consensus on entitlement reform has developed in Washington: rising per-capita health care spending is the only real crisis besetting the government‘s entitlement programs, while America‘s aging population and Social Security play minor roles at best. Some cite this view to shift the policy emphasis from entitlement cost control to the restructuring of the U.S. health sector, including private health care. But this new consensus is flawed. Using standard accounting practices and including all major government entitlement programs, population aging will play an equal role with health care cost growth over the next seventy-five years and a significantly larger role than health spending over the next few decades. While rising health care spending is indeed a pressing issue, discounting population aging leaves out half of the problem and ignores half of the potential solutions.

Economic Costs of Population Aging

In just over three decades all those born during the post-war baby boom will be 65 and older, and the fraction of the population 'old' will be far greater than previously experienced in Canada, or indeed in any modern industrial nation. That prospect has given rise to major concerns about our ability as a society to meet the large anticipated additions to health care, pension, and other costs associated with the increase in the older population. However, a balanced view requires that attention be given to all publicly provided services, not only to those services used in large measure by the elderly, and also to privately provided goods and services, since the costs must be charged against the same national income in both cases. Beyond that, it is important to recognize that population change affects not only the demand side of the economy, but also the supply side, the nation's productive capacity. This paper reviews the literature to assess the magnitude of the prospective cost increases associated with the aging of the Canadian population and considers the practical implications for government programs and policiespopulation aging; economic costs; baby boom

The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity

In this chapter, William Scarth examines the relationship between population aging, productivity and growth in living standards and reaches a more optimistic conclusion about the effects of aging on productivity. Indeed, he finding that aging may in fact lead to increases in productivity, even if no policy initiative is taken. He argues that our economy possesses at least three adjustment mechanisms that insulate living standards from the adverse effects of an aging population.Aging, Ageing, Population Aging, Demography, Demographic Shift, Baby Boomers, Baby Boom, Dependence, Indebtedness, Debt, Investment, Productivity, Simulation, Growth, Consumption

Population aging and endogenous economic growth

This article investigates the consequences of population aging for long-run economic growth perspectives. We introduce age specific heterogeneity of households into a model of research and development (R&D) based technological change. We show that the framework incorporates two standard specifications as special cases: endogenous growth models with scale eects and semi-endogenous growth models without scale effects. The introduction of an age structured population implies that aggregate laws of motion for capital and consumption have to be obtained by integrating over different cohorts. It is analytically shown that these laws of motion depend on the underlying demographic assumptions. Our results are that (i) increases in longevity have positive effects on per capita output growth, (ii) decreases in fertility have negative effects on per capita output growth, (iii) the longevity effect dominates the fertility eect in case of endogenous growth models and (iv) population aging fosters long-run growth in endogenous growth models, while the converse holds true in semiendogenous growth frameworks.population aging, endogenous technological change, longrun economic growth

Economic Costs of Population Aging.

In just over three decades all those born during the post-war baby boom will be 65 and older, and the fraction of the population ‘old’ will be far greater than previously experienced in Canada, or indeed in any modern industrial nation. That prospect has given rise to major concerns about our ability as a society to meet the large anticipated additions to health care, pension, and other costs associated with the increase in the older population. However, a balanced view requires that attention be given to all publicly provided services, not only to those services used in large measure by the elderly, and also to privately provided goods and services, since the costs must be charged against the same national income in both cases. Beyond that, it is important to recognize that population change affects not only the demand side of the economy, but also the supply side, the nation’s productive capacity. This paper reviews the literature to assess the magnitude of the prospective cost increases associated with the aging of the Canadian population and considers the practical implications for government programs and policies.