Superannuation, Population Ageing and Living Standards in Australia
AbstractIn this paper we simulate the effect of an increase in the Superannuation Guarantee Levy (SGL) by 3 percent and 6 percent, respectively, on average living standards. We apply the Guest-McDonald model of optimal national saving for a small open economy. The simulations account for the projected age structure of the population, the differences in productivity of workers of different ages and the differences in consumption demands of young and older consumers. In this way we account for the impact of population ageing on living standards. To the extent that an increase in the SGL increases national saving beyond what it would otherwise have been, there are two effects on living standards. One is an intergenerational redistribution of living standards from the present to future generations. The effect is to lower living standards for approximately the next 30 years after which living standards rise, compared to their levels under the benchmark scenario. However, the rise in living standards in the distant future is negligible in discounted terms. The second effect arises from the nature of the SGL as a tax on employment. This reduces employment and therefore reduces the future cash flows available to support living standards. The negative impact of this employment effect on living standards is small according to our calculations.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).
Volume (Year): 32 (2002)
Issue (Month): 1 (March)
Ageing; Consumer; Consumption; Saving;
Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guest, R.S. & McDonald, I.M., 1999. "Ageing, Immigration and Optimal National Saving in Australia. a," Department of Economics - Working Papers Series 690, The University of Melbourne.
- Cutler, D.M. & Poterba, J.M. & Sheiner, L.M. & Summers, L.H., 1990.
"An Aging Society: Opportunity Or Challenge,"
553, Massachusetts Institute of Technology (MIT), Department of Economics.
- Bateman, Hazel & Ablett. John, 2000. "Compulsory Superannuation and Australian Generational Accounts," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 30(1), pages 33-48, March.
- repec:fth:harver:1490 is not listed on IDEAS
- Ross S. Guest & Ian M. McDonald, 2000.
"Population Ageing and Projections of Government Social Outlays in Australia,"
Australian Economic Review,
The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(1), pages 49-64.
- Guest, R.S. & McDonald, I.M., 1999. "Population Ageing and Projections of Government Social Outlays in Australia," Department of Economics - Working Papers Series 689, The University of Melbourne.
- Freebairn, John, 1998. "Compulsory Superannuation and Labour Market Responses," Australian Economic Papers, Wiley Blackwell, vol. 37(1), pages 58-70, March.
- Andrew Worthington, 2008. "Knowledge and Perceptions of Superannuation in Australia," Journal of Consumer Policy, Springer, vol. 31(3), pages 349-368, September.
- George Kudrna & Alan Woodland, 2012. "Macroeconomic and Welfare Effects of the 2010 Changes to Mandatory Superannuation," Working Papers 201210, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
- John Janssen, 2002. "Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand," Treasury Working Paper Series 02/05, New Zealand Treasury.
- Louise Carter, 2005. "Labour Market Responses to the Abolition of Compulsory Superannuation," Economics Discussion / Working Papers 05-18, The University of Western Australia, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manuela Torgler).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.