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The Fiscal Consequences of Shrinking Populations

Author

Listed:
  • Mr. Benedict J. Clements
  • Mr. Kamil Dybczak
  • Vitor Gaspar
  • Mr. Sanjeev Gupta
  • Mauricio Soto

Abstract

This Staff Discussion Note looks at the stark fiscal challenges posed by the decline and aging of populations between now and 2100. It finds that without reforms, pensions and health spending would rise to 25 percent of GDP by end-century in more developed countries (and 16 percent of GDP in less developed countries), with potentially dire fiscal consequences. Given the uncertainty underlying the population projections and associated large fiscal risks, a multi-pronged approach will be required. This could include entitlement reform—starting now but at a gradual pace; policies that affect demographics and labor markets; and better tax systems and more efficient public expenditure.

Suggested Citation

  • Mr. Benedict J. Clements & Mr. Kamil Dybczak & Vitor Gaspar & Mr. Sanjeev Gupta & Mauricio Soto, 2015. "The Fiscal Consequences of Shrinking Populations," IMF Staff Discussion Notes 2015/021, International Monetary Fund.
    • Handle: RePEc:imf:imfsdn:2015/021
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    Citations

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    Cited by:

    1. Sang-Hyop Lee & Jungsuk Kim & Donghyun Park, 2017. "Demographic Change and Fiscal Sustainability in Asia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 287-322, October.
    2. Mr. Shekhar Aiyar & Mr. Christian H Ebeke, 2016. "The Impact of Workforce Aging on European Productivity," IMF Working Papers 2016/238, International Monetary Fund.
    3. Sena Kimm Gnangnon, 2019. "Fiscal Space for Trade: How Could the International Trade Community Help?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-42, February.
    4. Maria Teresa Medeiros Garcia & André Fernando Rodrigues Rocha da Silva, 2023. "Pension expenditure determinants: the case of Portugal," Public Sector Economics, Institute of Public Finance, vol. 47(2), pages 177-203.
    5. Joel OUDINET, 2021. "Introduction - L’impact de la migration sur le développement inclusif," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 53, pages 5-21.
    6. W. Melyn & L. Van Meensel & S. Van Parys, 2016. "The sustainability of public finances in the context of population ageing," Economic Review, National Bank of Belgium, issue iii, pages 87-103, December.
    7. Daniela Bobeva, 2019. "Economic Impact of Elderly Migration and Pension Transfers," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 333-344, September.
    8. Hazans, Mihails, 2018. "An in-depth analysis of the emigration of skilled labour. Latvia," MPRA Paper 118493, University Library of Munich, Germany.
    9. Gnangnon Sena Kimm, 2018. "Export Product Concentration and De Facto Fiscal Space: Does Openness to International Trade matter?," Global Economy Journal, De Gruyter, vol. 18(1), pages 1-12, March.
    10. Maria Teresa Medeiros Garcia & André Fernando Rodrigues Rocha da Silva, 2019. "Assessing Pension Expenditure Determinants – the Case of Portugal," Working Papers REM 2019/68, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    11. Sèna Kimm Gnangnon & Jean-François Brun, 2020. "Tax reform and fiscal space in developing countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(2), pages 237-265, June.
    12. Alexandre Sidorenko, 2019. "Demographic transition and "demographic security" in post-Soviet countries," Population and Economics, ARPHA Platform, vol. 3(3), pages 1-22, September.
    13. Stefan Speck, 2017. "Environmental tax reform and the potential implications of tax base erosions in the context of emission reduction targets and demographic change," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 407-423, December.
    14. Adriana Florina Popa & Stefania Amalia Jimon & Delia David & Daniela Nicoleta Sahlian, 2021. "Influence of Fiscal Policies and Labor Market Characteristics on Sustainable Social Insurance Budgets—Empirical Evidence from Central and Eastern European Countries," Sustainability, MDPI, vol. 13(11), pages 1-14, May.

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