A global view on demographic pressure and labour market participation
AbstractDemographic change across the globe puts pressure on labour markets and public finances. Most studies on ageing focus on the projected development of the old age dependency ratio, being the ratio of persons 65 or older relative to the working age population. This ratio gives a very incomplete picture of the (fiscal) pressure from demographic changes. In this study, besides the share of the dependent population composed of the young and the old, we also include the share of the working age population that is not active on the labour market, labelled as the labour market space. By analysing 21 developing and 29 developed economies across the globe, we cover 75% of the 9.3 billion people that the United Nations projects for the whole world in 2050. A new indicator, relating demographic pressure from fiscal spending to the available space at the labour market, enables us to quantify and compare the pressure-to-space across countries over the time span 2010-2050. The indicator points out that Poland, Turkey and Greece are most under pressure. Developing countries, such as Uganda, the Democratic Republic of Congo and Tanzania will experience a very low pressure up to 2050 in case their fiscal spending per young and elderly person remains at the current levels. In most of the countries under high pressure there seems to be room for using the labour market space by, for instance, working more hours or increasing the retirement age, as this will alleviate the fiscal pressure. This suggests a policy trade-off between maintaining publicly financed services to the dependent population and maintaining labour market space.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 32057.
Date of creation: 06 Jul 2011
Date of revision:
demography; dependency rates; labour market; unemployment; social security; pensions; government spending;
Other versions of this item:
- Marga Peeters & Loek Groot, 2012. "A Global View On Demographic Pressure And Labour Market Participation," Journal of Global Economy, Research Centre for Social Sciences,Mumbai, India, vol. 8(2), pages 165-194, June.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J0 - Labor and Demographic Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-AGE-2011-07-13 (Economics of Ageing)
- NEP-ALL-2011-07-13 (All new papers)
- NEP-LAB-2011-07-13 (Labour Economics)
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by Loek Groot, Marga Peeters in Me Judice on 2011-11-07 12:00:00
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