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Changing Age and Household Patterns: Implications for Welfare Costs in Denmark 1982 – 2007

Author

Listed:
  • Rasmus Højbjerg Jacobsen

    (Centre for Economic and Business Research, Copenhagen Business School, in Copenhagen, Denmark.)

  • Svend E. Hougaard Jensen

    (Department of Economics, Copenhagen Business School, in Copenhagen, Denmark.)

Abstract

This paper studies the effects on tax revenues and welfare expenditures in Denmark caused by changes in age and household structures over the years 1982-2007. During that period, there has been a minor fall in the old-age dependency ratio, and a major increase in the number of people living alone, lone parents and cohabiting couples. Focusing on components of welfare services with noticeable differences in unit costs across age and household status, we find that changes in age structures have improved public finances by 1.6% of GDP whereas changing household structures have worsened public finances by almost 1% of GDP on the yearly budget. While the net fiscal effect of changing household structures is minor, the gross effects are substantial. In a future characterized by population ageing, public finances may be adversely affected by changes in both age and household structures, thus intensifying calls for welfare reforms.

Suggested Citation

  • Rasmus Højbjerg Jacobsen & Svend E. Hougaard Jensen, 2014. "Changing Age and Household Patterns: Implications for Welfare Costs in Denmark 1982 – 2007," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 39, pages 1-4.
    • Handle: RePEc:noj:journl:v:39:y:2014:p:4
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    References listed on IDEAS

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    2. Jacobsen, Rasmus Højbjerg & Jensen, Svend E. Hougaard, 2014. "Future changes in age and household patterns: Some implications for public finances," International Journal of Forecasting, Elsevier, vol. 30(4), pages 1110-1119.
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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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