IDEAS home Printed from https://ideas.repec.org/p/mcm/qseprr/339.html
   My bibliography  Save this paper

Economic Costs of Population Aging

Author

Listed:
  • Frank T. Denton
  • Byron G. Spencer

Abstract

In just over three decades all those born during the post-war baby boom will be 65 and older, and the fraction of the population 'old' will be far greater than previously experienced in Canada, or indeed in any modern industrial nation. That prospect has given rise to major concerns about our ability as a society to meet the large anticipated additions to health care, pension, and other costs associated with the increase in the older population. However, a balanced view requires that attention be given to all publicly provided services, not only to those services used in large measure by the elderly, and also to privately provided goods and services, since the costs must be charged against the same national income in both cases. Beyond that, it is important to recognize that population change affects not only the demand side of the economy, but also the supply side, the nation's productive capacity. This paper reviews the literature to assess the magnitude of the prospective cost increases associated with the aging of the Canadian population and considers the practical implications for government programs and policies

Suggested Citation

  • Frank T. Denton & Byron G. Spencer, 1998. "Economic Costs of Population Aging," Quantitative Studies in Economics and Population Research Reports 339, McMaster University.
  • Handle: RePEc:mcm:qseprr:339
    as

    Download full text from publisher

    File URL: http://socserv.mcmaster.ca/qsep/p/qsep339.PDF
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Vaupel, James W, 1998. "Demographic Analysis of Aging and Longevity," American Economic Review, American Economic Association, vol. 88(2), pages 242-247, May.
    2. Dennis Ahlburg & James Vaupel, 1990. "Alternative Projections of the U.S. population," Demography, Springer;Population Association of America (PAA), vol. 27(4), pages 639-652, November.
    3. Feldstein, Martin, 1996. "The Missing Piece in Policy Analysis: Social Security Reform," American Economic Review, American Economic Association, vol. 86(2), pages 1-14, May.
    4. Ronald Lee & Jonathan Skinner, 1999. "Will Aging Baby Boomers Bust the Federal Budget?," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 117-140, Winter.
    5. Frank T. Denton & Christine H. Feaver & Byron G. Spencer, 1997. "Immigration, Labour Force, and the Age Structure of the Population," Independence and Economic Security of the Older Population Research Papers 24, McMaster University.
    6. Schieber, Sylvester J & Shoven, John B, 1996. "Social Security Reform: Around the World in 80 Ways," American Economic Review, American Economic Association, vol. 86(2), pages 373-377, May.
    7. Jonathan Gruber, 1999. "Social Security and Retirement in Canada," NBER Chapters, in: Social Security and Retirement around the World, pages 73-99, National Bureau of Economic Research, Inc.
    8. Martin Feldstein, 1995. "Would Privatizing Social Security Raise Economic Welfare?," NBER Working Papers 5281, National Bureau of Economic Research, Inc.
    9. Mitchell, Olivia S & Zeldes, Stephen P, 1996. "Social Security Privatization: A Structure for Analysis," American Economic Review, American Economic Association, vol. 86(2), pages 363-367, May.
    10. Laurence J. Kotlikoff & Willi Leibfritz & Willi Leibfritz, 1999. "An International Comparison of Generational Accounts," NBER Chapters, in: Generational Accounting around the World, pages 73-102, National Bureau of Economic Research, Inc.
    11. Paul Johnson, 1996. "Grey Horizons: Who Pays for Old Age in the 21st Century?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(3), pages 261-271, July.
    12. Sheetal K. Chand & Mr. Albert Jaeger, 1996. "Aging Populations and Public Pension Schemes," IMF Occasional Papers 1996/013, International Monetary Fund.
    13. Gramlich, Edward M, 1996. "Different Approaches for Dealing with Social Security," American Economic Review, American Economic Association, vol. 86(2), pages 358-362, May.
    14. James M. Poterba, 1994. "International Comparisons of Household Saving," NBER Books, National Bureau of Economic Research, Inc, number pote94-1.
    15. Lee, Ronald & Tuljapurkar, Shripad, 1998. "Uncertain Demographic Futures and Social Security Finances," American Economic Review, American Economic Association, vol. 88(2), pages 237-241, May.
    16. James M. Poterba, 1997. "Demographic structure and the political economy of public education," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 48-66.
    17. Frank T. Denton & Christine H. Feaver & Byron G. Spencer, 1996. "The Future Population of Canada and Its Age Distribution," Independence and Economic Security of the Older Population Research Papers 3, McMaster University.
    18. F.T. Denton & B.G. Spencer, 1996. "Population Aging and the Maintenance of Social Support Systems," Quantitative Studies in Economics and Population Research Reports 320, McMaster University.
    19. Baker, Michael & Benjamin, Dwayne, 1999. "How do retirement tests affect the labour supply of older men?," Journal of Public Economics, Elsevier, vol. 71(1), pages 27-51, January.
    20. Richard Disney, 1996. "Can We Afford to Grow Older?," MIT Press Books, The MIT Press, edition 1, volume 1, number 026204157x, April.
    21. David M. Cutler & James M. Poterba & Louise M. Sheiner & Lawrence H. Summers, 1990. "An Aging Society: Opportunity or Challenge?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 1-74.
    22. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
    23. Frank Denton & Byron Spencer, 1999. "How old is old? Revising the definition based on life table criteria," Mathematical Population Studies, Taylor & Francis Journals, vol. 7(2), pages 147-159.
    24. Ronald Lee & Shripad Tuljapurkar, 1997. "Death and Taxes: Longer life, consumption, and social security," Demography, Springer;Population Association of America (PAA), vol. 34(1), pages 67-81, February.
    25. Axel Borsch-Supan & Reinhold Schnabel, 1999. "Social Security and Retirement in Germany," NBER Chapters, in: Social Security and Retirement around the World, pages 135-180, National Bureau of Economic Research, Inc.
    26. Robert W. Hartman & Thomas J. Espenshade, 1994. "Can immigration slow U.S. population aging?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(4), pages 759-768.
    27. James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
    28. Ronald Lee & Shripad Tuljapurkar, "undated". "Death and Taxes: How Longer Life Will Affect Social Security," Working Papers _004, University of California at Berkeley, Demography of Aging.
    29. Frank T. Denton & Byron G. Spencer, 1997. "Demographic Trends, Labour Force Participation, and Long-term Growth," Quantitative Studies in Economics and Population Research Reports 334, McMaster University.
    30. John Burbidge & Deborah Fretz & Michael R. Veall, 1998. "Canadian and American Saving Rates and the Role of RRSPs," Canadian Public Policy, University of Toronto Press, vol. 24(2), pages 259-263, June.
    31. David A. Wise, 1996. "Advances in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise96-1.
    32. Baker, Michael & Benjamin, Dwayne, 1999. "Early Retirement Provisions and the Labor Force Behavior of Older Men: Evidence from Canada," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 724-756, October.
    33. Clark, Robert L & Kreps, Juanita & Spengler, Joseph J, 1978. "Economics of Aging: A Survey," Journal of Economic Literature, American Economic Association, vol. 16(3), pages 919-962, September.
    34. Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc.
    35. David K. Foot, 1984. "The Demographic Future of Fiscal Federalism in Canada," Canadian Public Policy, University of Toronto Press, vol. 10(4), pages 406-414, December.
    36. John Burbidge, 1996. "Public Pensions in Canada," Independence and Economic Security of the Older Population Research Papers 1, McMaster University.
    37. Peter Diamond, 1996. "Public Provision of Pensions: The Doug Purvis Memorial Lecture," Canadian Public Policy, University of Toronto Press, vol. 22(1), pages 1-6, March.
    38. Deborah Roseveare & Willi Leibfritz & Douglas Fore & Eckhard Wurzel, 1996. "Ageing Populations, Pension Systems and Government Budgets: Simulations for 20 OECD Countries," OECD Economics Department Working Papers 168, OECD Publishing.
    39. Jacques Henripin, 1994. "The Financial Consequences of Population Aging," Canadian Public Policy, University of Toronto Press, vol. 20(1), pages 78-94, March.
    40. John Burbidge & James B. Davies, 1994. "Household Data on Saving Behavior in Canada," NBER Chapters, in: International Comparisons of Household Saving, pages 11-56, National Bureau of Economic Research, Inc.
    41. Carroll, Chris & Summers, Lawrence H., 1987. "Why have private savings rates in the United States and Canada diverged?," Journal of Monetary Economics, Elsevier, vol. 20(2), pages 249-279, September.
    42. Dave Turner & Claude Giorno & Alain de Serres & Ann Vourc'h & Pete Richardson, 1998. "The Macroeconomic Implications of Ageing in a Global Context," OECD Economics Department Working Papers 193, OECD Publishing.
    43. Michael D. Hurd, 1996. "The Effect of Labor Market Rigidities on the Labor Force Rigidities on the Labor Force," NBER Chapters, in: Advances in the Economics of Aging, pages 11-60, National Bureau of Economic Research, Inc.
    44. Gauthier, Hervé, 1991. "L’incidence du vieillissement démographique sur les dépenses sociales," L'Actualité Economique, Société Canadienne de Science Economique, vol. 67(1), pages 103-118, mars.
    45. repec:fth:harver:1490 is not listed on IDEAS
    46. M. S. Marzouk, 1991. "Aging, Age-Specific Health Care Costs and the Future Health Care Burden in Canada," Canadian Public Policy, University of Toronto Press, vol. 17(4), pages 490-506, December.
    47. Jonathan Gruber & David Wise, 1997. "Social Security Programs and Retirement Around the World: Introduction and Summary of Papers by..," NBER Working Papers 6134, National Bureau of Economic Research, Inc.
    48. Echevarria, Cruz A, 1995. "On Age Distribution of Population, Government Expenditure and Fiscal Federalism," Journal of Population Economics, Springer;European Society for Population Economics, vol. 8(3), pages 301-313, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Manamba EPAPHRA, 2016. "Nonlinearities in Inflation and Growth Nexus: The Case of Tanzania," Journal of Economics and Political Economy, KSP Journals, vol. 3(3), pages 471-512, September.
    2. Manamba EPAPHRA & John MASSAWE, 2016. "Investment and Economic Growth: An Empirical Analysis for Tanzania," Turkish Economic Review, KSP Journals, vol. 3(4), pages 578-609, December.
    3. Paula C. Albuquerque & João C. Lopes, 2010. "Economic impacts of ageing: an inter‐industry approach," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 37(12), pages 970-986, October.
    4. Marcelin Joanis & David Boisclair & Claude Montmarquette, 2004. "La santé au Québec : des options pour financer la croissance," CIRANO Project Reports 2004rp-04, CIRANO.
    5. Frank T. Denton & Byron G. Spencer, 1999. "Population Aging and Its Economic Costs: A Survey of the Issues and Evidence," Social and Economic Dimensions of an Aging Population Research Papers 1, McMaster University.
    6. Ulrich Thießen & Konstantin A. Kholodilin & Boriss Siliverstovs, 2008. "Does Aging Influence Sectoral Employment Shares?: Evidence from Panel Data," Discussion Papers of DIW Berlin 785, DIW Berlin, German Institute for Economic Research.
    7. Frank T. Denton & Byron G. Spencer, 1999. "Population Aging and Its Costs: A Survey of the Issues and Evidence," Department of Economics Working Papers 1999-03, McMaster University.
    8. 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.
    9. Ulrich Thießen, 2007. "Aging and Structural Change," Discussion Papers of DIW Berlin 742, DIW Berlin, German Institute for Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frank T. Denton & Byron G. Spencer, 1999. "Population Aging and Its Costs: A Survey of the Issues and Evidence," Department of Economics Working Papers 1999-03, McMaster University.
    2. Frank T. Denton & Byron G. Spencer, 1999. "Population Aging and Its Economic Costs: A Survey of the Issues and Evidence," Quantitative Studies in Economics and Population Research Reports 340, McMaster University.
    3. David K. Miles, 2000. "Funded and Unfunded Pension Schemes: Risk, Return and Welfare," CESifo Working Paper Series 239, CESifo.
    4. Bhattacharya, Joydeep & Reed, Robert R., 2002. "Age-specific employment policies," ISU General Staff Papers 200211050800001187, Iowa State University, Department of Economics.
    5. Marek Loužek, 2007. "Pension Reform in the Czech Republic - A Contribution into the Debate," Prague Economic Papers, Prague University of Economics and Business, vol. 2007(1), pages 55-69.
    6. Miles, David, 2000. "Funded and Unfunded Pensions: Risk, Return and Welfare," CEPR Discussion Papers 2369, C.E.P.R. Discussion Papers.
    7. David Miles & Ales Cerny, 2001. "Risk, Return and Portfolio Allocation under Alternative Pension Arrangements with Imperfect Financial Markets," CESifo Working Paper Series 441, CESifo.
    8. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    9. Michele Boldrin & Juan J. Dolado & Juan F. Jimeno & Franco Peracchi, "undated". "The future of pension systems in Europe. A reappraisal," Working Papers 99-08, FEDEA.
    10. Börsch-Supan, Axel & Winter, Joachim, 1999. "Pension reform, savings behavior and corporate governance," Papers 99-48, Sonderforschungsbreich 504.
    11. Walter M. Cadette, 1997. "Social Security: The Challenge of Financing the Baby-Boom's Retirement," Macroeconomics 9711010, University Library of Munich, Germany.
    12. Miles, David & Cerny, Ales, 2001. "Risk Return and Portfolio Allocation under Alternative Pension Systems with Imperfect Financial Markets," CEPR Discussion Papers 2779, C.E.P.R. Discussion Papers.
    13. Barry P. Bosworth & Gary Burtless, 1997. "Social Security reform in a global context," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, issue jun, pages 243-274.
    14. Beetsma, Roel & Bettendorf, Leon & Broer, Peter, 2003. "The budgeting and economic consequences of ageing in the Netherlands," Economic Modelling, Elsevier, vol. 20(5), pages 987-1013, September.
    15. David M. Blau, 2008. "Retirement and Consumption in a Life Cycle Model," Journal of Labor Economics, University of Chicago Press, vol. 26(1), pages 35-71.
    16. Richard Disney & Robert Palacios & Edward Whitehouse, 1999. "Individual choice of pension arrangement as a pension reform strategy," IFS Working Papers W99/18, Institute for Fiscal Studies.
    17. Marek Loužek, 2006. "Má důchodová reforma se zadlužením smysl? [Has pension reform with indebtedness a sense?]," Politická ekonomie, Prague University of Economics and Business, vol. 2006(2), pages 247-260.
    18. Jeff Borland, 2005. "Transitions to Retirement: A Review," Melbourne Institute Working Paper Series wp2005n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    19. David S. Loughran & Steven Haider, 2007. "Do the Elderly Respond to Taxes on Earnings? Evidence from the Social Security Retirement Earnings Test," Working Papers 223-1, RAND Corporation.
    20. Richard Disney & Sarah Smith, 2002. "The Labour Supply Effect of the Abolition of the Earnings Rule for Older Workers in the United Kingdom," Economic Journal, Royal Economic Society, vol. 112(478), pages 136-152, March.

    More about this item

    Keywords

    population aging; economic costs; baby boom;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mcm:qseprr:339. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/demcmca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.