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Population Aging, Savings Behavior and Capital Markets

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Author Info
Axel H. Boersch-Supan
Joachim K. Winter

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Abstract

Population aging is just beginning to hit the industrialized countries in full force, and it will have a tremendous impact on capital markets. In this paper, we argue that the capital market effects of population aging are particularly strong in continental European economies such as Germany, France, and Italy, with their large and ailing pay-as-you-go public pension systems, relatively thin capital markets, and poor capital performance. The younger generations in these countries are quite aware of the need to provide for more retirement income through own private saving, and these effects will be accentuated by fundamental pension reforms that aim at more pre-funding. Population aging changes households' savings behavior and portfolio composition, and much more assets will be invested on the stock market. Capital markets will grow in size, and active institutional investors such as pension funds will become more important in continental European countries. These changes are likely to have beneficial side effects in terms of improved capital efficiency, total factor productivity, and growth. Looking at the effects of population aging on savings behavior and capital markets therefore adds a new dimension to the continuing debate about advantages and disadvantages of pay-as-you-go and fully funded pension systems.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8561.

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Date of creation: Oct 2001
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Full references

Cited by:
(explanations, 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.)

  1. Lothar Essig, 2002. "Stockholding in Germany," MEA discussion paper series 02019, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  2. Axel Börsch-Supan, 2002. "What We Know and What We Do NOT Know," MEA discussion paper series 02017, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  3. Florian Heiss & Alexander Ludwig & Joachim Winter, 2002. "Pension reform, capital markets, and the rate of return," MEA discussion paper series 02023, Mannheim Research Institute for the Economics of Aging, University of Mannheim. [Downloadable!]
    Other versions:
  4. Lothar Essig, 2002. "Stockholding in Germany," MEA discussion paper series 02019, Mannheim Research Institute for the Economics of Aging, University of Mannheim. [Downloadable!]
  5. Axel Börsch-Supan & Alexander Ludwig & Anette Reil-Held, 2004. "Hochrechnungsmethoden und Szenarien für gesetzliche und private Renteninformationen," MEA discussion paper series 04049, Mannheim Research Institute for the Economics of Aging, University of Mannheim. [Downloadable!]
  6. Börsch-Supan, Axel & Ludwig, Alexander & Reil-Held, Anette, 2004. "Projection methods and scenarios for public and private pension information," Sonderforschungsbereich 504 Publications 04-61, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
  7. Axel Börsch-Supan & Jens Köke & Joachim Winter, 2004. "Pension reform, savings behavior and capital market performance," MEA discussion paper series 04053, Mannheim Research Institute for the Economics of Aging, University of Mannheim. [Downloadable!]
    Other versions:
  8. Marko Köthenbürger & Panu Poutvaara, 2004. "Social Security Reform and Intergenerational Trade: Is there Scope for a Pareto-Improvement?," Public Economics 0404008, EconWPA. [Downloadable!]
    Other versions:
  9. Joachim Winter, 2002. "The impact of pension reforms and demography on stock markets," MEA discussion paper series 02021, Mannheim Research Institute for the Economics of Aging, University of Mannheim. [Downloadable!]
    Other versions:
  10. Axel Börsch-Supan, 2002. "What We Know and What We Do NOT Know," MEA discussion paper series 02017, Mannheim Research Institute for the Economics of Aging, University of Mannheim. [Downloadable!]
  11. Axel Börsch-Supan & Alexander Ludwig & Anette Reil-Held, 2004. "Hochrechnungsmethoden und Szenarien für gesetzliche und private Renteninformationen," MEA discussion paper series 04049, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  12. Axel Börsch-Supan & Anette Reil-Held & Alexander Ludwig, 2005. "Projection methods and scenarios for public and private pension information," MEA discussion paper series 05068, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  13. Axel Börsch-Supan, 2003. "What are NDC Pension Systems? What Do They Bring to Reform Strategies?," MEA discussion paper series 03042, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  14. Axel Börsch-Supan, 2003. "What are NDC Pension Systems? What Do They Bring to Reform Strategies?," MEA discussion paper series 03042, Mannheim Research Institute for the Economics of Aging, University of Mannheim. [Downloadable!]
  15. Melanie Lührmann, 2003. "Demographic Change, Foresight and International Capital Flows," MEA discussion paper series 03038, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
    Other versions:
  16. Börsch-Supan, Axel & Ludwig, Alexander & Winter, Joachim, 2001. "Aging, pension reform, and capital flows: A multi-country simulation model," Sonderforschungsbereich 504 Publications 01-08, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
    Other versions:
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