The Economic Consequences of Population Aging

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Case Details:

Case Code : ECON023
Case Length : 19 Pages
Period : 1960-2007
Pub. Date : 2007
Teaching Note :Not Available
Organization : --
Industry : Miscellaneous
Countries : Worldwide

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

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...


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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