Challenge of Ageing Population
Challenge of Ageing Population
Synopsis: The ageing of the population has become on of the major talking points of modern economics and its implications for world growth in the future. This essay examines the causes of the demographic shift by focusing on the changes in mortality and fertility experienced by the developed and developing world. It then attempts to answer some of the questions about the economic implications of ageing populations, including implications for future economic growth, the government's fiscal position and the level of national savings. It concludes by presenting policy options that the government may adopt to offset the negative effects associated with population ageing.
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Around the world most developed and rapidly developing economies are beginning to be confronted with the same problem the ageing of the population. While it may seem like a recent phenomenon, demographic data indicates that it has been slowly occurring over the past two centuries. What is remarkable is the accelerated pace at which it has been occurring in developing countries, and as such affects virtually all advanced economies throughout the world. We will examine through the rest of this essay the causes and implications of this demographic shift for the World's economies, as well as some suggested remedies.
The ageing of the population implies that the average age of the population is increasing. This is occurring as a direct result of declining mortality, people are living longer, and declining birth rate, there are fewer young people. These two demographic variables seem irrevocably linked to growth in developed countries, with mortality and fertility falling as countries become more prosperous.
Mortality appears to fall first as an economy experiences strong growth. Weil (2005) identifies three forces that account for the mortality transition:
i) Improvements in the standard of
Synopsis: The ageing of the population has become on of the major talking points of modern economics and its implications for world growth in the future. This essay examines the causes of the demographic shift by focusing on the changes in mortality and fertility experienced by the developed and developing world. It then attempts to answer some of the questions about the economic implications of ageing populations, including implications for future economic growth, the government's fiscal position and the level of national savings. It concludes by presenting policy options that the government may adopt to offset the negative effects associated with population ageing.
____________________________________________________________
____________
Around the world most developed and rapidly developing economies are beginning to be confronted with the same problem the ageing of the population. While it may seem like a recent phenomenon, demographic data indicates that it has been slowly occurring over the past two centuries. What is remarkable is the accelerated pace at which it has been occurring in developing countries, and as such affects virtually all advanced economies throughout the world. We will examine through the rest of this essay the causes and implications of this demographic shift for the World's economies, as well as some suggested remedies.
The ageing of the population implies that the average age of the population is increasing. This is occurring as a direct result of declining mortality, people are living longer, and declining birth rate, there are fewer young people. These two demographic variables seem irrevocably linked to growth in developed countries, with mortality and fertility falling as countries become more prosperous.
Mortality appears to fall first as an economy experiences strong growth. Weil (2005) identifies three forces that account for the mortality transition:
i) Improvements in the standard of
References: • Australian Treasury (2002), Intergenerational Report 2002-03, 2002-03 Budget Paper No 5, AGPS, Canberrra • Bayoumi, T., Hossein, S., Masson, P.R., (1998) "International Evidence on the Determinants of Private Saving", World Bank Economic Review, 12 (3):483-502 • Bloom, D.E. and Williamson, J., (1998), "Demographic Transitions and Economic Miracles in Emerging Asia", World Bank Economic Review, 12 (3):419-455 • Dowrick, S., (1999), "Demographic Change and Australian Economic Growth to 2020", Conference Proceedings, Productivity Commission, Melbourne, 18-19 March AGPS • Edey, M, (2005), "Challenge of Ageing Populations", Reserve Bank Bulletin, June, pp7-12 • Jones, C. (2002), Introduction to Economic Growth, 2nd edition, W.W. Norton, ch2 • Roseveare, D, Liebfritz, W, Fore, D. and Wurzel, E., (1996), Ageing Populations, Pension Systems and Government Budgets: Simulations for 20 OECD Countries, OECD Economics Department Working Papers, No 168. • Weil, D.N., (2005), Economic Growth, ch3,4,5.