Population Ageing, Taxation, Pensions and Health Costs
AbstractThis paper argues against the policy position that begins with a doomsday scenario of publicly provided health insurance and pension systems threatened with collapse under the stresses imposed by population ageing, and instead contends that the threat of crisis in these systems is policy driven. The central thesis of the paper is that a range of policies lead to the creation of an ageing crisis by inhibiting the efficient reallocation of female labour from the home to the market in response to the decline in fertility. The analysis focuses on family support policies that create large effective tax burdens on female labour supply, by means testing the support on family income, or selectively on the second income. Examples include Family Tax Benefit Part A and Part B, the Medicare Levy and the Medicare Safety Net. The analysis draws on household survey data to show that female labour supply is strongly positively associated with household saving, the purchase of private health insurance and spending on family health generally. Policies that inhibit female labour supply therefore have the effect of reducing the tax base for funding public pensions and health care, while simultaneously reducing the capacity of families to fund them privately.
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Bibliographic InfoPaper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 564.
Date of creation: Nov 2007
Date of revision:
life cycle; health costs; pensions; household taxation;
Other versions of this item:
- Patricia Apps & Ray Rees, 2007. "Population Ageing, Taxation, pensions and Health Costs," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(2), pages 79-97, June.
- D19 - Microeconomics - - Household Behavior - - - Other
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
This paper has been announced in the following NEP Reports:
- NEP-AGE-2007-12-15 (Economics of Ageing)
- NEP-ALL-2007-12-15 (All new papers)
- NEP-HEA-2007-12-15 (Health Economics)
- NEP-IAS-2007-12-15 (Insurance Economics)
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