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Population ageing, taxation, pensions and health costs, CHERE Working Paper 2007/10

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Author Info

  • Patricia Apps

    ()
    (University of Sydney)

  • Ray Rees
  • Margi Wood

Abstract

This 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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File URL: http://www.chere.uts.edu.au/pdf/wp2007_10.pdf
File Function: First version, October 2007
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Bibliographic Info

Paper provided by CHERE, University of Technology, Sydney in its series Working Papers with number 2007/10.

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Date of creation: Oct 2007
Date of revision:
Handle: RePEc:her:chewps:2007/10

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Postal: Level 4, 645 Harris Street, Ultimo, NSW 2007
Phone: +61 2 9514 9799
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Web page: http://www.chere.uts.edu.au
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Related research

Keywords: life cycle; health costs; pensions; household taxation;

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