Transcript Ageing_Populationx

 National statistics
Data
 Median age for all countries
 Present: 29
 2050:
38
 Population over 60
 Present: 11% of 6.9 billion
 2050:
22% of over 9 billion & 33% in developed world
 By 2050 in the rich world, 1 person in 3 will be a
pensioner (already the case in Japan?)
Reasons
 Fall in birth rate
 Why?
 Fall in death rate
 Why?
Reasons
 1900 average life expectancy across world was 30
 Now it is 67
 1900 average life expectancy in rich countries was just
under 50
 Now it is 78 and rising
 1970s average children per couple was 4.3
 Present: 2.6 children (average worldwide) or 1.6 children
in rich countries
 Baby boom after the Second World War has created a
temporary blip
Dependency ratio
 The proportion of the population who are too young, too
old or too sick to work and so who are reliant on the
output of those who are working
 Puts upward pressure on health care, community care &
pensions
 The demographic time bomb – places an increasing
burden on the labour force
Issues
 Pensions & health spending
 Falling birth rates
 Increasing life expectancy
 A shrinking labour force
 Falling output growth – are older workers less
productive?
Solutions?
 Suggest solutions for the following issues:
 Pension funding
 Falling fertility rate (use France as an example?)
 Health spending
Pensions crisis
 Accept people must work for longer – raise retirement
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age
Accept smaller state pensions – encourage private
provision
Encourage saving
Phased retirement
Information failure – do people know enough about
finance to make informed investment decisions?
Effect of falling share prices on pension funds
Effect on informal economy of people working longer
Health care spending
 By 2050, life expectancy will be 77 (male) & 83 (female)
 Some studies predict 3 extra months of life every year
that passes, i.e. by 2050 life expectancy will be in the mid
90s
 BUT stress & obesity has increased – 30% of Americans
are clinically obese
 EU estimate puts health-care spending on elderly at 3040% of total health spending
 Germany, Netherlands & Japan have introduced
mandatory long-term-care insurance schemes
Improving birth rate
 Women are marrying & having children later in life
 Economists believe a family with 1 child needs 30% extra
income to maintain the same standard of living
 How do we encourage women to have more babies?
France
 Fertility rate is close to replacement level
 High female employment rates
 Large government cash transfers to families
 Generous parental leave pay
 Part-time work
 Available formal child care
 Cost: 3-4% of GDP on direct benefit to families
Japan
 Considering bigger family allowances
 More favourable tax treatment of families
 More nursery places
 BUT culture of long working hours
UK & USA
 Fertility rates are close to replacement level (immigration
makes up the shortfall)
 Due to: Flexible labour markets
 High levels of teenage pregnancy
 Explain why there is a Pensions Crisis [15 marks]
 Discuss the extent to which this Pensions Crisis might
impact on the UK labour market and the economy as a
whole [20 marks]