{ "title": "Shrinking Populations, Rising Fiscal Challenges", "publication": "IMF Blog, October 27, 2015", "sourceUrl": "https://www.imf.org/en/blogs/articles/2015/10/27/shrinking-populations-rising-fiscal-challenges", "canonical": "https://www.imf.org/en/blogs/articles/2015/10/27/shrinking-populations-rising-fiscal-challenges", "overlayPath": "/en/blogs/articles/2015/10/27/shrinking-populations-rising-fiscal-challenges/index.md", "summary": "Publication date: October 27, 2015; By Benedict Clements, Kamil Dybczak, and Mauricio Soto.", "sections": [ { "heading": "Overview and projections", "content": "- Publication date: October 27, 2015; By Benedict Clements, Kamil Dybczak, and Mauricio Soto.\n- Population trajectories:\n - By the end of this century, populations will be shrinking in about two-thirds of the world’s countries: nearly 70 percent of more-developed countries and about 65 percent of less-developed ones.\n - The share of the world population older than age 65 is expected to increase from 12 percent today to 38 percent by 2100 (old-age dependency ratio: the 65-and-older population as a percentage of the population aged 15 to 64)." }, { "heading": "Fiscal impacts and projections under unchanged policies", "content": "- Expected increases in age-related spending (pensions and health) with current policies unchanged:\n - In more-developed countries, spending will reach 25 percent of GDP by the end of the century.\n - In less-developed countries, spending will reach 16 percent of GDP by the end of the century.\n- Potential fiscal consequences:\n - Unsustainable public debt, sharp cuts in other spending, or large tax increases that stifle economic growth." }, { "heading": "Risks to projections", "content": "- Demographic projection uncertainty:\n - If fertility and mortality turn out to be lower than forecast, fiscal impacts will be larger.\n - Example sensitivities:\n - Lower fertility on its own could raise age-related spending by another 8 percentage points of GDP in more-developed countries by the end of the century.\n - Lower fertility could raise age-related spending by another 4½ percentage points of GDP in less-developed countries by the end of the century.\n - Additional longevity increases would add further fiscal impact on top of these figures." }, { "heading": "Policy recommendations and potential fiscal effects", "content": "- Entitlement reform\n - Start now, but implement at a gradual pace to spread burdens across generations and reduce risk of reversals.\n- Contain growth of health care spending\n - If growth in health care costs per capita were kept in line with growth in GDP per capita:\n - This could lower public health care spending by 4½ percentage points of GDP by 2100 in more-developed countries.\n - This could lower public health care spending by 3 percentage points of GDP by 2100 in less-developed countries.\n - Possible measures: increase competition among insurers and service providers; improve provider payment systems; emphasize primary and preventive health; make more effective use of health information technology.\n- Increase retirement ages to match longevity gains\n - Increasing the retirement age by an extra five years has the potential to yield savings on pension spending of about 2 percentage points of GDP in both more- and less-developed countries.\n - Accompany increases with adequate provisions for the poor, who have shorter life expectancy than the average population.\n- Policies affecting demographics and labor markets\n - Raising migration from younger, less-developed economies to older, more-developed economies can relieve spending pressures until migrants age and retire; not a substitute for fundamental entitlement reforms.\n - Boosting fertility has limited responsiveness to public policy.\n - Raise labor force participation—especially for women and older workers—by addressing:\n - Gender differences in property rights, inheritance claims, and property titling.\n - Barriers to women pursuing professions, obtaining jobs, or opening bank accounts.\n - Legal rights for women to initiate legal proceedings, sign contracts, and head households.\n - Fiscal disincentives such as taxation of households that raise marginal rates for second earners.\n- Improve tax systems and public expenditure efficiency\n - Tax-side measures: widen VAT bases; strengthen taxation of multinational corporations; greater use of energy taxation; exploit recurrent property taxation; strengthen tax compliance.\n - Spending-side measures: reduce energy subsidies; improve public investment management; rationalize public sector wage bills, including in education." }, { "heading": "Summary conclusion", "content": "- The fiscal challenge from shrinking and aging populations is stark and requires bold, multi-pronged reforms.\n- Undertaking reforms now allows more gradual, politically palatable adjustment and reduces the risk of unsustainable fiscal outcomes.\n\nSource: Shrinking Populations, Rising Fiscal Challenges (IMF blog, October 27, 2015).\n\n---\n\n Content in this bundle\n\n- 人口缩减，财政挑战增加; iMFdirect博客; 2015 年10 月27 日\n - 人口缩减，财政挑战增加; iMFdirect博客; 2015 年10 月27 日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 人口缩减，财政挑战增加; iMFdirect博客; 2015 年10 月27 日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 減少する人口、増大する財政面での課題: ベネディクト・クレメンツ、 カミール・ドゥブチャック、モリシオ・ソト; iMFdirect ブログ2015年10月27日掲載\n - 減少する人口、増大する財政面での課題: ベネディクト・クレメンツ、 カミール・ドゥブチャック、モリシオ・ソト; iMFdirect ブログ2015年10月27日掲載 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 減少する人口、増大する財政面での課題: ベネディクト・クレメンツ、 カミール・ドゥブチャック、モリシオ・ソト; iMFdirect ブログ2015年10月27日掲載 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Fiscal Monitor: Taxing Times; October 2013\n - Fiscal Monitor: Taxing Times; October 2013 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Fiscal Monitor: Taxing Times; October 2013 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Fiscal Monitor: Public Expenditure Reform—Making Difficult Choices; April 2014\n - Fiscal Monitor: Public Expenditure Reform—Making Difficult Choices; April 2014 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Fiscal Monitor: Public Expenditure Reform—Making Difficult Choices; April 2014 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Country Report\n - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n- Staff Discussion Note\n - Staff Discussion Note (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Staff Discussion Note (PDF){rel=\"external\" type=\"application/pdf\"}\n- Staff Discussion Note\n - Staff Discussion Note (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Staff Discussion Note (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Benedict Clements\n- Kamil Dybczak\n- Mauricio Soto\n\nSource: https://www.imf.org/en/blogs/articles/2015/10/27/shrinking-populations-rising-fiscal-challenges" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2015/10/27/shrinking-populations-rising-fiscal-challenges/index.md)", "[Structured JSON version](/en/blogs/articles/2015/10/27/shrinking-populations-rising-fiscal-challenges/index.json)", "[Bundle manifest](/en/blogs/articles/2015/10/27/shrinking-populations-rising-fiscal-challenges/bundle-manifest.json)", "Authors: Benedict Clements, Kamil Dybczak, Mauricio Soto", "Published: October 27, 2015", "Publication date: October 27, 2015; By Benedict Clements, Kamil Dybczak, and Mauricio Soto.", "Population trajectories:", "Expected increases in age-related spending (pensions and health) with current policies unchanged:", "Potential fiscal consequences:", "Demographic projection uncertainty:", "Entitlement reform", "Contain growth of health care spending", "Increase retirement ages to match longevity gains", "Policies affecting demographics and labor markets", "Improve tax systems and public expenditure efficiency", "The fiscal challenge from shrinking and aging populations is stark and requires bold, multi-pronged reforms.", "Undertaking reforms now allows more gradual, politically palatable adjustment and reduces the risk of unsustainable fiscal outcomes.", "**人口缩减，财政挑战增加; iMFdirect博客; 2015 年10 月27 日**", "**減少する人口、増大する財政面での課題: ベネディクト・クレメンツ、 カミール・ドゥブチャック、モリシオ・ソト; iMFdirect ブログ2015年10月27日掲載**", "**Fiscal Monitor: Taxing Times; October 2013**", "**Fiscal Monitor: Public Expenditure Reform—Making Difficult Choices; April 2014**", "**Country Report**", "**Staff Discussion Note**", "**Staff Discussion Note**", "[Benedict Clements](http://blogs.imf.org/bloggers/benedict-clements/)", "[Kamil Dybczak](http://blogs.imf.org/bloggers/kamil-dybczak/)", "[Mauricio Soto](http://blogs.imf.org/bloggers/mauricio-soto/)" ], "related": [ { "title": "人口缩减，财政挑战增加; 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