The Price of Maturity
Finance & Development, June 2011, Vol. 48, No. 2
Ronald Lee is a Professor of Demography and Economics at the
Andrew Mason is a Professor of Economics at the
Aging populations mean countries have to find new ways to support their elderly
Available online at: http://bit.ly/jZ3DS5
“…..THE WORLD’S POPULATION will reach 7 billion this year and is projected to exceed 9 billion in 2050. But despite the overall increase, hidden behind these headline numbers are important changes in the age distribution of the population. In the rich industrial nations as well as some middle- and lower-income countries, populations will age as the proportion of elderly people within the mix rises dramatically.
Surprisingly, this population aging is driven more by low fertility than by longer life. Low fertility means fewer children to grow up and enter the workforce, while the number of elderly keeps rising. But people are also living longer, which reinforces the effects of low fertility. Between now and 2050, about 1 billion working-age adults and 1.25 billion members of the age 60+ population will be added to the global population, while the number of people younger than 25 is projected to hold steady at 3 billion (UN, 2009).
These changes have worrisome implications for both policymakers and individuals, since most elderly people are no longer part of the labor force and their consumption must be funded by their younger family members, by public or private pensions, or by their accumulated asset holdings. As the ratio of elderly to working-age people rises, it becomes more difficult to fund them through public or private transfers, and asset accumulation is often inadequate.
We examine how the elderly are supported in different countries and discuss how these support systems will be affected by population aging…”
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