Does Population Aging Represent a Crisis for Rich Societies?

28 May 2002

In Does Population Aging Represent a Crisis for Rich Societies? Gary Burtless from the Brookings Institution in Washington discusses the alleged fiscal crisis facing industrialised nations as a result of population aging. It argues that the idea of crisis is misleading because it takes too narrow a view, ignoring many of the financial offsets and other benefits resulting from broader population change.

A common view among policymakers is that population aging represents a crisis for industrialized countries. Because pensions and old age health insurance are largely funded out of public budgets, increases in the percentage of the population past retirement age must eventually cause steep increases in the fraction of government budgets devoted to old age consumption and a rise in the level of public spending. According to one view, either taxes or government debt will be pushed to unsustainable levels unless public programs are significantly reformed to curtail retirement benefits.

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