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The economic consequences of ageing populations

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  • K. Mc Morrow
  • W. Roeger

Abstract

This paper examines the economic implications of ageing populations. Simulations with the QUEST II model, which take explicit account of the labour force and public finance implications of ageing, suggest per capita living standards in the EU, US and Japan are likely to fall significantly over the next 50 years due to the direct influence of the ageing process. The effect of ageing populations in terms of slowing the rate of growth of potential output will also make the budgetary implications of ageing more difficult for the individual economies to bear. If the scenarios prove accurate, economic agents in Europe could be looking at an annual half point reduction in potential growth rates from the present 2 ¼ percent to an average rate of 1 ¾ percent over the period 2000-2050, representing a cumulative GDP loss of nearly 20 percent. Cumulative reductions of 10% and 21½% are predicted for the US and Japan respectively. While it can be argued that the latter no policy change simulation may be unrealistic in that Governments are unlikely to stand idly by, it nevertheless gives an idea of the scale of the task faced by policymakers in devising policy measures aimed at avoiding, or at least cushioning, the potential shock to peoples' living standards.

Suggested Citation

  • K. Mc Morrow & W. Roeger, 1999. "The economic consequences of ageing populations," European Economy - Economic Papers 2008 - 2015 138, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:ecopap:0138
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    Cited by:

    1. Frank T. Denton & Byron G. Spencer, 2003. "Population Change and Economic Growth: The Long-Term Outlook," Social and Economic Dimensions of an Aging Population Research Papers 102, McMaster University.
    2. Ulrich Thiessen & Konstantin A. Kholodilin & Boriss Siliverstovs, 2008. "Does Aging Influence Sectoral Employment Shares? Evidence from Panel Data," KOF Working papers 08-214, KOF Swiss Economic Institute, ETH Zurich.
    3. Conrad, Alexander, 2008. "Banking in schrumpfenden Regionen: Auswirkungen von Alterung und Abwanderung auf Regionalbanken," Thuenen-Series of Applied Economic Theory 94, University of Rostock, Institute of Economics.
    4. Medeiros, João, 2000. "Endogenous Versus Exogenous Growth Facing a Fertility Shock," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Siliverstovs, Boriss & Kholodilin, Konstantin A. & Thiessen, Ulrich, 2011. "Does aging influence structural change? Evidence from panel data," Economic Systems, Elsevier, vol. 35(2), pages 244-260, June.
    6. Barry P. Bosworth & Ralph C. Bryant & Gary Burtless, 2004. "The Impact of Aging on Financial Markets and the Economy: A Survey," Working Papers, Center for Retirement Research at Boston College 2004-23, Center for Retirement Research.
    7. Ulrich Thießen, 2007. "Aging and Structural Change," Discussion Papers of DIW Berlin 742, DIW Berlin, German Institute for Economic Research.
    8. Aleksejs Melihovs, 2014. "Forecasting Natural Population Change: the Case of Latvia," Discussion Papers 2014/03, Latvijas Banka.

    More about this item

    Keywords

    ageing; demographics; public finances;

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