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Aging Anxiety : Much Ado About Nothing ?

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  • Monika BÜTLER
  • Georg KIRCHSTEIGER

Abstract

Social security systems in most industrialized countries face severe financial problems due to adverse demographic changes. The increase in old-age dependency, however, will be spread over a period of approximately 50 years. The degree of technological progress necessary to offset the negative effects of aging might therefore be small. Using models with endogenous labor supply and with capital accumulation, we demonstrate that under plausible assumptions, current living standards can be maintained with a moderate rate of technological progress. The necessary rate of growth increases both in the size of the program and in the fraction of agents who exclusively depend on public pensions in retirement.

Suggested Citation

  • Monika BÜTLER & Georg KIRCHSTEIGER, 2000. "Aging Anxiety : Much Ado About Nothing ?," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 00.11, Université de Lausanne, Faculté des HEC, DEEP.
  • Handle: RePEc:lau:crdeep:00.11
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    References listed on IDEAS

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    1. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 300-323, April.
    2. Bohn, Henning, 1999. "Will social security and Medicare remain viable as the U.S. population is aging?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 1-53, June.
    3. Martin Feldstein, 1985. "The Optimal Level of Social Security Benefits," The Quarterly Journal of Economics, Oxford University Press, vol. 100(2), pages 303-320.
    4. Sheetal K. Chand & Albert Jaeger, 1996. "Aging Populations and Public Pension Schemes," IMF Occasional Papers 147, International Monetary Fund.
    5. Alan J. Auerbach & Laurence J. Kotlikoff & Robert P. Hagemann & Giuseppe Nicoletti, 1989. "The Economic Dynamics of an Ageing Population: The Case of Four OECD Countries," OECD Economics Department Working Papers 62, OECD Publishing.
    6. Gustman, Alan L. & Steinmeier, Thomas L., 1999. "Effects of pensions on savings: analysis with data from the health and retirement study," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 271-324, June.
    7. Diamond, P. A., 1977. "A framework for social security analysis," Journal of Public Economics, Elsevier, vol. 8(3), pages 275-298, December.
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    Cited by:

    1. Alois Guger & Christine Mayrhuber, 2001. "Labour Market Perspectives and Funding of Old-age Pensions until 2030," WIFO Monatsberichte (monthly reports), WIFO, vol. 74(9), pages 553-565, September.
    2. Christine Mayrhuber & Thomas Url, 2000. "Redistribution and Contribution Equivalence Austrian Old Age Security," WIFO Monatsberichte (monthly reports), WIFO, vol. 73(9), pages 547-557, September.

    More about this item

    Keywords

    social security; aging; technological progress;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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