Population Ageing and Structural Adjustment
AbstractThe future effects of population ageing on the Australian economy have been widely canvassed in recent years, most notably in the two Intergenerational Reports produced by the Australian Treasury and in the Economic Implications of an Ageing Australia report produced by the Productivity Commission. These reports are mainly concerned with the effect of ageing on the government's budgetary position. On the income side, they focus on how ageing affects labour supply and gross domestic product. On the expenditure side, they focus on how ageing affects various spending categories including education, health and aged care. This paper provides a complementary analysis in that it considers how the structure of the economy is likely to be affected by these influences. In particular, it analyses the effects on 64 skill groups, 81 occupations and 106 industries: a scale effect due to age-related shifts in total hours of employment (with the skill composition of employment unchanged). a skill effect due to age-related shifts in hours of employment distinguished by skill (with total hours of employment unchanged), a taste effect due to age-related shifts in the commodity composition of household final consumption, and a public effect due to age-related shifts in government final consumption. The simulations are conducted using the MONASH applied general equilibrium model of the Australian economy. They generate results for each year from 2004-05 to 2024-25, but the analysis concentrates on explaining the deviations in the levels of selected variables in the basecase (ageing) simulation from their values in the counterfactual (no ageing) simulation in the final year, i.e., 2024-25. Results are reported separately for each of the four effects and for all four taken together (the total effect). The paper pays particular attention to the implications of the analysis for economic policy.
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Bibliographic InfoPaper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-181.
Date of creation: Jan 2009
Date of revision:
Publication status: Published in Australian Journal of Labour Economics, 2008, Vol. 11(3), pp. 227-247.
computable general equilibrium modelling; population ageing; economic policy;
Other versions of this item:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-02-28 (Economics of Ageing)
- NEP-ALL-2009-02-28 (All new papers)
- NEP-CMP-2009-02-28 (Computational Economics)
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.:
- James Giesecke & G.A. Meagher, 2008. "Modelling the Economic Effects of Population Ageing," Centre of Policy Studies/IMPACT Centre Working Papers g-172, Victoria University, Centre of Policy Studies/IMPACT Centre.
- Peter B. Dixon & Maureen T. Rimmer, 2006. "The Displacement Effect of Labour-Market Programs: MONASH Analysis," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages S26-S40, 09.
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