The Economic Consequences of Population Aging
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Case Code: ECON023 Case Length: 19 Pages Period: 1960-2007 Pub Date: 2007 Teaching Note: Not Available |
Price: Rs.300 Organization : - Industry : Miscellaneous Countries : Global Themes: Economics |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Causes of Aging Populations
The aging of populations affected most developed countries. However, the pace of aging and the proportion of the population aged 65 and above varied in different countries. While Japan's population was aging more rapidly, in countries like the US, the aging problem was less acute...
Decline in Birth Rates and Aging Populations
A decline in the birth rate was considered an important factor for aging populations. Declining birth rates were, in turn, a result of growing sections of the population postponing their first child, deciding to marry late or even not marry at all, the growing incidence of infertility, and an increasing number of women making a conscious decision to remain 'childfree'. For example, in Japan, since 1970, the number of young people postponing marriage has been increasing, as also the number of people choosing to remain single...
Increase in Life Expectancy at Birth
In addition to the decline in birth rates, increase in life expectancy at birth was the other contributory factor to aging populations. A high life expectancy indicated that a country was well developed. Hiroshi Yoshikawa, Professor of University of Tokyo, Department of Economics, said, "A healthy long life is an index which shows the development of the human society."...
Effects of an Aging Population
An aging population has major socio-economic consequences for a country. An aging population would contribute to a smaller and shrinking working population. Low birth rates implied fewer new entrants into the labor force, which could hamper economic growth in the absence of sharp rises in productivity. Most developed countries, especially in Europe, had "pay as you go" pension systems. The working population made contributions to such pension funds which were directly used to pay pensions to retirees...
Tackling The Problems Caused by Population Aging
As more and more countries faced the problem of aging population, governments were drawing up policy measures to deal with the problems that go with it. Many developed countries, especially in Europe have introduced initiatives to increase their birth rates, and provide incentives for married couples to have more children. For example, in France, couples with two or more children had a lower income tax rate. Families with three children received a monthly allowance of approximately € 265, which increased when the children reached 11 years. Families with three or more children received carte famille nombreuse or large family cards that allowed them to get 30% discounts on trains and half-price on the metro. There were other benefits like free entry to swimming-pools and an allowance of approximately € 220 a year for extra-curricular arts and sports. Apart from these, there was a tax deduction for domestic help, to make it easier for mothers to continue working...
Looking Ahead
Most countries affected by aging populations had taken measures to increase their birth rates. While successful in some countries, with fertility rates increasing in the 2000s compared to the 1970s and 1980s, they were still nowhere near the replacement rate of 2.1. According to analysts, the monetary assistance provided by the government in some countries was insufficient. For example, in Russia the allowance was apparently not enough to cover costs especially because of rising price levels. Irina Mironova, a young mother in Russia said, "I feel the authorities live in a totally different world and don't understand how difficult it is to raise children on the little money we are provided." Meanwhile, the government's family programs attracted criticism from people who had no children. They were of the view that the policy was nothing but redistribution of money from people without children to those who had children...
Exhibits
Exhibit I: Projected Life Expectancy in Japan
Exhibit II: Age Structure of World Population in 1950, 2000, and 2050
Exhibit III Populations and Age Structures of Some Countries in 2007
Exhibit IV: Age at First Marriage* in Japan and Some EU Countries
Exhibit V: Percentage of Unmarried Adults in Japan
Exhibit VI: Average Age of Mother Bearing First Child in Japan
Exhibit VII: Births Outside Marriage as a Percent of Total Births in Some EU Countries
Exhibit VIII: World Infant Mortality Rate (1950-2010)
Exhibit IX: Life Expectancy of Males and Females in Some Countries in 1960 and 2007
Exhibit X: A Comparison of Private Savings among Different Age Groups
Exhibit XI: Fertility Rate in Some Countries
Exhibit XII: Foreign Workers in Japanese Companies in Japan: 1997-2006
Exhibit XIII: Total Fertility Rate and Life Expectancy at Birth between 1950 and 2050: Worldwide
Exhibit XIV: Old Age Dependency Ratios in G7 Countries 2000-2050
Exhibit XV: Participation of People Aged 65 and Over in the Workforce in Some Countries in 2000 and 2010*
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