The Fiscal Consequences of Shrinking Populations

By Benedict J. Clements, Kamil Dybczak, Vitor Gaspar, Sanjeev Gupta, Mauricio Soto

October 26, 2015

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Format: Chicago

Benedict J. Clements, Kamil Dybczak, Vitor Gaspar, Sanjeev Gupta, and Mauricio Soto. The Fiscal Consequences of Shrinking Populations, (USA: International Monetary Fund, 2015) accessed June 17, 2025

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

This Staff Discussion Note looks at the stark fiscal challenges posed by the decline and aging of populations between now and 2100. It finds that without reforms, pensions and health spending would rise to 25 percent of GDP by end-century in more developed countries (and 16 percent of GDP in less developed countries), with potentially dire fiscal consequences. Given the uncertainty underlying the population projections and associated large fiscal risks, a multi-pronged approach will be required. This could include entitlement reform—starting now but at a gradual pace; policies that affect demographics and labor markets; and better tax systems and more efficient public expenditure.

Subject: Aging, Expenditure, Health care spending, Migration, Pension spending, Population and demographics

Keywords: Africa, Age-related spending, Aging, Demographics, Dependency ratio, Health care, Health care spending, Health Spending, Labor market, Migration, Old-age dependency ratio, Pension Spending, Population Growth, Present discounted value, Public Debt, Ratio, SDN, Spending

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2015/021
Stock No:

SDNEA2015021
ISBN:

9781513544885
ISSN:

2617-6750

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