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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Causes of Aging Populations

The aging of populations affected most developed countries. However, the pace of aging and the proportion of the population aged 65 and above varied in different countries. While Japan's population was aging more rapidly, in countries like the US, the aging problem was less acute...

Decline in Birth Rates and Aging Populations

A decline in the birth rate was considered an important factor for aging populations. Declining birth rates were, in turn, a result of growing sections of the population postponing their first child, deciding to marry late or even not marry at all, the growing incidence of infertility, and an increasing number of women making a conscious decision to remain 'childfree'.

For example, in Japan, since 1970, the number of young people postponing marriage has been increasing, as also the number of people choosing to remain single...

Increase in Life Expectancy at Birth

In addition to the decline in birth rates, increase in life expectancy at birth was the other contributory factor to aging populations. A high life expectancy indicated that a country was well developed. Hiroshi Yoshikawa, Professor of University of Tokyo, Department of Economics, said, "A healthy long life is an index which shows the development of the human society."...

Effects of an Aging Population

An aging population has major socio-economic consequences for a country. An aging population would contribute to a smaller and shrinking working population. Low birth rates implied fewer new entrants into the labor force, which could hamper economic growth in the absence of sharp rises in productivity.

Most developed countries, especially in Europe, had "pay as you go" pension systems. The working population made contributions to such pension funds which were directly used to pay pensions to retirees...

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