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The economic consequences of ageing populations

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  • K. Mc Morrow
  • W. Roeger
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    Abstract

    This paper examines the economic implications of ageing populations. Simulations with the QUEST II model, which take explicit account of the labour force and public finance implications of ageing, suggest per capita living standards in the EU, US and Japan are likely to fall significantly over the next 50 years due to the direct influence of the ageing process. The effect of ageing populations in terms of slowing the rate of growth of potential output will also make the budgetary implications of ageing more difficult for the individual economies to bear. If the scenarios prove accurate, economic agents in Europe could be looking at an annual half point reduction in potential growth rates from the present 2 ¼ percent to an average rate of 1 ¾ percent over the period 2000-2050, representing a cumulative GDP loss of nearly 20 percent. Cumulative reductions of 10% and 21½% are predicted for the US and Japan respectively. While it can be argued that the latter no policy change simulation may be unrealistic in that Governments are unlikely to stand idly by, it nevertheless gives an idea of the scale of the task faced by policymakers in devising policy measures aimed at avoiding, or at least cushioning, the potential shock to peoples' living standards.

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    File URL: http://ec.europa.eu/economy_finance/publications/publication11151_en.pdf
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    Bibliographic Info

    Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 138.

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    Length: 104 pages
    Date of creation: Nov 1999
    Date of revision:
    Handle: RePEc:euf:ecopap:0138

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    Related research

    Keywords: ageing; demographics; public finances;

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    Cited by:
    1. Medeiros, João, 2000. "Endogenous Versus Exogenous Growth Facing a Fertility Shock," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Frank T. Denton & Byron G. Spencer, 2003. "Population Change and Economic Growth: The Long-Term Outlook," Social and Economic Dimensions of an Aging Population Research Papers 102, McMaster University.
    3. Conrad, Alexander, 2008. "Banking in schrumpfenden Regionen: Auswirkungen von Alterung und Abwanderung auf Regionalbanken," Thuenen-Series of Applied Economic Theory 94, University of Rostock, Institute of Economics.
    4. Siliverstovs, Boriss & Kholodilin, Konstantin A. & Thiessen, Ulrich, 2011. "Does aging influence structural change? Evidence from panel data," Economic Systems, Elsevier, vol. 35(2), pages 244-260, June.
    5. Ulrich Thießen & Konstantin A. Kholodilin & Boriss Siliverstovs, 2008. "Does Aging Influence Sectoral Employment Shares?: Evidence from Panel Data," Discussion Papers of DIW Berlin 785, DIW Berlin, German Institute for Economic Research.
    6. Barry P. Bosworth & Ralph C. Bryant & Gary Burtless, 2004. "The Impact of Aging on Financial Markets and the Economy: A Survey," Working Papers, Center for Retirement Research at Boston College 2004-23, Center for Retirement Research.
    7. Ulrich Thießen, 2007. "Aging and Structural Change," Discussion Papers of DIW Berlin 742, DIW Berlin, German Institute for Economic Research.

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