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Introduction and Summary

  • D. Peter Broer
  • Jukka Lassila
Conference paper

Abstract

The age composition of the population in developed countries is shifting rapidly in favour of the elderly. Projections by the United Nations indicate that for the OECD area as a whole the share of the elderly (people at an age of 65 or above) will increase from 15% in 1990 to 22% in 2040. At the same time, the old-age dependency ratio1 is expected to rise from 20% to 37%. For individual countries, these ratios may develop in an even more dramatic fashion, e.g. for Japan a rise of the dependency ratio from 16% to over 50% is projected, and for Germany from 22% to 48%. For developing countries, a similar change is expected at a later stage (United Nations (1994)). In the last decade, it is increasingly being recognized that this worldwide change in the age structure of the population will have far-reaching economic consequences. The change should give rise to substantial shifts in the distribution of the net financial burden of the public sector across generations, mostly as a result of a declining labour force participation. Rising dependency ratios imply a decline in the size of the tax base that can be used to finance public expenditure and social security transfers. Without a substantial cut in public expenditure programs and transfers, the ageing process will therefore cause a substantial increase in the net tax burden for younger generations.

Keywords

Public Debt Pension System Government Debt Pension Scheme Public Pension 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Berlin Heidelberg 1997

Authors and Affiliations

  • D. Peter Broer
    • 1
    • 2
  • Jukka Lassila
    • 3
  1. 1.OCFEBErasmus UniversityRotterdamThe Netherlands
  2. 2.CPB Netherlands Bureau of Economic Policy AnalysisThe HagueThe Netherlands
  3. 3.The Research Institute of the Finnish EconomyETLAHelsinkiFinland

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