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The Economics of Population Ageing


  • John Stephenson
  • Grant Scobie

    () (The University of Auckland
    The Treasury)


Demographic forecasts predict that over the next fifty years the proportion of people in New Zealand over the age of 65 will more than double, from 12 percent in 1999 to 26 percent in 2050. This paper reviews potential economic implications of this demographic change in the following broad categories: Demographic change, Labour Markets, Fiscal Impacts, Capital Markets, and Long-run economic growth effects. A synopsis is made of the key economic and demographic issues relating to each category, and the paper highlights those issues to be prioritised in further research. The paper also questions the existing frameworks and methodologies that have been used to study population ageing. Two issues stand out in this regard. Firstly, there is a tendency to view population ageing as a “static” phenomenon. The economic implications of population ageing are pervasive and complex. Future research may benefit from attention to individual behavioural responses to ageing and into the underlying demographic dynamics of population ageing. Secondly, the future economic impacts of an ageing population are inherently uncertain. Future research could well incorporate methodological approaches that attempt to account for these inherent uncertainties.

Suggested Citation

  • John Stephenson & Grant Scobie, 2002. "The Economics of Population Ageing," Treasury Working Paper Series 02/04, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:02/04

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    References listed on IDEAS

    1. 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.
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    3. Buiter, Willem H, 2001. "Notes on 'A Code for Fiscal Stability.'," Oxford Economic Papers, Oxford University Press, vol. 53(1), pages 1-19, January.
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    5. John B. Taylor, 2000. "Reassessing Discretionary Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 21-36, Summer.
    6. Sheetal K. Chand & Albert Jaeger, 1996. "Aging Populations and Public Pension Schemes," IMF Occasional Papers 147, International Monetary Fund.
    7. Alan J. Auerbach, 1994. "The U.S. Fiscal Problem: Where We are, How We Got Here, and Where We're Going," NBER Chapters,in: NBER Macroeconomics Annual 1994, Volume 9, pages 141-186 National Bureau of Economic Research, Inc.
    8. Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
    9. Alan J. Auerbach & Kevin A. Hassett, 1999. "Uncertainty and the Design of Long-Run Fiscal Policy," NBER Working Papers 7036, National Bureau of Economic Research, Inc.
    10. Brian McCulloch & Jane Frances, 2001. "Financing New Zealand Superannuation," Treasury Working Paper Series 01/20, New Zealand Treasury.
    11. Auerbach, Alan J., 1997. "Quantifying the Current U.S. Fiscal Imbalance," National Tax Journal, National Tax Association, vol. 50(3), pages 387-398, September.
    12. Bruce Baker & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "Generational Accounting in New Zealand," NBER Chapters,in: Generational Accounting around the World, pages 347-368 National Bureau of Economic Research, Inc.
    13. John Woods, 2000. "Manual for the Long Term Fiscal Model," Treasury Working Paper Series 00/02, New Zealand Treasury.
    14. 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.
    15. 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.
    16. Polackova, Hana, 1997. "Population aging and financing of government liabilities in New Zealand," Policy Research Working Paper Series 1703, The World Bank.
    17. Peter A. Diamond, 1999. "What Stock Market Returns To Expect For The Future?," Issues in Brief ib-2, Center for Retirement Research.
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    Cited by:

    1. John Creedy & Grant M Scobie, 2002. "Population Ageing and Social Expenditure in New Zealand: Stochastic Projections," Treasury Working Paper Series 02/28, New Zealand Treasury.
    2. Alimi, Omoniyi & Maré, Dave C. & Poot, Jacques, 2017. "More Pensioners, Less Income Inequality? The Impact of Changing Age Composition on Inequality in Big Cities and Elsewhere," IZA Discussion Papers 10690, Institute for the Study of Labor (IZA).
    3. Omoniyi B Alimi & David C Maré & Jacques Poot, 2017. "More pensioners, less income inequality?," Working Papers 17_02, Motu Economic and Public Policy Research.

    More about this item


    Population Ageing; Economics and Demographic Change;

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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