Fiscal Policy Issues in the Aging Societies

Aging may be one of the most far-reaching processes defining the economic, fiscal, and social changes societies are likely to experience over the next 40 years. The demographic consequences of aging will have a dramatic impact on labor markets, eco...

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Bibliographic Details
Main Authors:	Bogetic, Zeljko, Onder, Harun, Onal, Anil, Skrok, Emilia, Schwartz, Anita, Winkler, Hernan
Format:	Working Paper
Language:	English en_US
Published:	2015
Subjects:	AGING FISCAL POLICY AGE-RELATED SPENDING EUROPE CENTRAL ASIA AGING CENTRAL ASIA ACCESS TO HEALTH SERVICES ACCOUNTING ACCUMULATION OF DEBT ADULT MORTALITY ADVANCED ECONOMIES AGE DISTRIBUTION AGED AGING COUNTRIES BALANCE SHEETS BENEFICIARIES BENEFICIARY BUDGET CONSTRAINT BUDGET DEFICITS CAPITAL ACCUMULATION CAPITAL STOCK CAREGIVERS CHILD MORTALITY CLOSED ECONOMY CURRENCY CURRENCY COMPOSITION CURRENT POPULATION DEBT BURDEN DEBT BURDENS DEBT CRISIS DEBT ISSUANCE DEBT MANAGEMENT DEBT RATIO DEBT STOCK DEFICITS DEMOGRAPHIC DEMOGRAPHIC CHANGE DEMOGRAPHIC CHANGES DEMOGRAPHIC CONSEQUENCES DEMOGRAPHIC IMPACT DEMOGRAPHIC PROJECTIONS DEMOGRAPHIC TRANSITION DEPENDENCY RATIO DEPENDENCY RATIOS DEVELOPMENT INVESTMENTS DISABILITY DIVIDEND DURABLE ECONOMIC GROWTH ECONOMIC PERFORMANCE ELDERLY ELDERLY PEOPLE EXCISE TAXES EXPENDITURE EXPENDITURES FACTORS OF PRODUCTION FAMILIES FERTILITY FERTILITY RATES FEWER CHILDREN FINANCES FINANCIAL CRISIS FINANCIAL SECTOR FISCAL CONSOLIDATION FISCAL CONSOLIDATIONS FISCAL DEFICIT FISCAL MANAGEMENT FISCAL REFORMS FUTURE GENERATIONS GENERATIONAL ACCOUNTING GENERATIONAL ACCOUNTS GOVERNMENT BONDS GOVERNMENT BUDGETS GOVERNMENT EXPENDITURES GOVERNMENT SPENDING GROWTH RATE GROWTH RATES HEALTH CARE HEALTH CARE SYSTEM HEALTH REFORM HEALTH SECTOR HEALTH SERVICES HEALTH SPENDING HEALTH SYSTEMS HIGH POPULATION GROWTH HOLDING HOSPITAL IMMIGRATION IMPLICIT DEBT INCENTIVE STRUCTURE INCOME GROWTH INCOME LEVEL INCOME LEVELS INCOME TAXES INDEBTED COUNTRIES INDEBTEDNESS INEQUITIES INFLATION INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INITIAL DEBT INTERNATIONAL BANK INTERNATIONAL EFFORTS INVESTING LABOR FORCE LABOR FORCES LABOR MARKETS LIABILITY LIFE EXPECTANCY LIFELONG LEARNING LONG-TERM CARE LONG-TERM DEBT LOW FERTILITY LOWER FERTILITY MARKET REGULATION MIGRATION MIGRATION FLOW MORTALITY MORTALITY RATE NUMBER OF CHILDREN NUMBER OF PEOPLE NURSES OIL RESOURCES OLD AGE OLD-AGE OLD-AGE PENSION OLD-AGE PENSIONS OPEN ECONOMY OUTPUT PARTICULAR COUNTRY PENSION PENSION CONTRIBUTION PENSION CONTRIBUTIONS PENSION FUND PENSION SYSTEM PENSIONS PERSONAL INCOME PHYSICIANS POLICY CHANGE POLITICAL ECONOMY POPULATION DECLINE POPULATION DYNAMICS POPULATION GROWTH RATES POPULATION PROJECTIONS POPULATION SIZE POPULATION STRUCTURE PORTFOLIOS PRIVATE SAVINGS PROGRESS PUBLIC PUBLIC BUDGET PUBLIC DEBT PUBLIC EDUCATION PUBLIC EXPENDITURES PUBLIC FINANCE PUBLIC FINANCES PUBLIC HEALTH PUBLIC PENSION PUBLIC REVENUES PUBLIC SPENDING PURCHASING POWER QUALITY OF LIFE QUALITY OF SERVICES RATE OF POPULATION GROWTH RATE OF RETURN RATES OF GROWTH REGULATORY FRAMEWORKS REPLACEMENT RATES RESPECT RETIREMENT AGE RETIREMENT AGES RETURNS SAVINGS SCHOOL-AGE CHILDREN SECONDARY EDUCATION SHORT TERM DEBT SOCIAL CHANGES SOCIAL SECURITY SOCIAL SERVICES SOCIAL SYSTEMS STATE GUARANTEES STOCK EXCHANGE STRUCTURAL PROBLEMS TAX TAX EXEMPTIONS TAX POLICY TAX REVENUES TAX SYSTEM TECHNOLOGICAL CHANGES TERTIARY EDUCATION TRANSITION COUNTRIES TREATY UNEMPLOYMENT WAGE GROWTH WORK FORCE WORKERS WORKING POPULATION WORKING-AGE POPULATION WORLD DEVELOPMENT INDICATORS WORLD POPULATION YOUNG PEOPLE YOUNG POPULATIONS
Online Access:	http://documents.worldbank.org/curated/en/2015/03/24200847/fiscal-policy-issues-aging-societies http://hdl.handle.net/10986/21782

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Summary:	Aging may be one of the most far-reaching processes defining the economic, fiscal, and social changes societies are likely to experience over the next 40 years. The demographic consequences of aging will have a dramatic impact on labor markets, economic growth, social structures--and government budgets. These issues have gained urgency after the second largest global recession in the past 100 years. Based on a broad comparative analysis of countries that include the EU and non-EU European and Central Asian countries, as well as several case studies and model simulations, the paper seeks to provide broad answers--tailored in part to distinct groups of countries according to their aging-fiscal profiles--to major questions facing governments budgets in aging societies: What are the fiscal-aging profiles of Western European, emerging European, and Central Asian countries? In other words, how good or bad is their fiscal situation--"initial conditions"--in view of their emerging aging-related problems? What kind of public spending pressures are likely to emerge in the coming decades, and what will be their relative importance? How do countries compare in terms of the possible impacts of aging on growth and long-term debt sustainability? What can be learned from in-depth and comparative case studies of aging, fiscal sustainability, and fiscal reform? Are there good-practice examples--countries doing things right at the right time--that may offer lessons for the others? And, perhaps most important, given the need for long-term fiscal consolidation for many countries, what kind of revenue and expenditure policy agendas are likely to emerge to mitigate the effects of aging? A key policy conclusion is that countries should aim for early rather than delayed reforms dealing with long-term aging pressures. The urgency is accentuated by the debt situations and/or adverse debt and demographic dynamics in almost all countries but also by the evolving voter preferences. As societies age and voting preferences increasingly reflect the political will of the older population, it will become more difficult to enact the necessary reforms ensuring social and fiscal sustainability.

Fiscal Policy Issues in the Aging Societies

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