Policy Challenges of Population Aging in Ireland
IMF Working Papers, October 1, 2007
Source details
- Canonical URL
- Policy Challenges of Population Aging in Ireland
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Bibliographic details
- Authors: Dora M Iakova, Dennis P Botman
- Published: October 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451868104.001
Overview and context
- Authors: Dora M Iakova, Dennis P Botman
- Publication date: October 1, 2007
- Series: Working Paper No. 2007/247
- Pages: 15
- DOI: https://doi.org/10.5089/9781451868104.001
- ISBN: 9781451868104
- ISSN: 1018-5941
- Subjects: Aging, Expenditure, Pension spending, Pensions, Social security contributions
- Keywords: debt, GDP, rate, social security contribution rate, spending, WP
Key findings and projections
- The projected rise in age-related government spending as a share of GDP in Ireland over the next forty years is among the highest in the euro area.
- In the absence of reforms, public debt will increase to unsustainable levels.
- The paper uses the IMF's Global Fiscal Model to compare the macroeconomic effects of different fiscal strategies to accommodate the rise in age-related spending.
- Simulations suggest that adopting a package of measures would be more growth-friendly than relying exclusively on raising the social security contribution rate.
Policy analysis and recommended measures
- Measures evaluated (via simulation):
- Increase in the retirement age
- Broadening the tax base
- Raising indirect taxes
- Raising the social security contribution rate (assessed as a less growth-friendly, exclusive strategy)
- Principal policy recommendation:
- Adopt a package of measures including an increase in the retirement age, broadening the tax base, and raising indirect taxes rather than relying exclusively on raising the social security contribution rate.
Implications
- Fiscal strategy matters: a multi-pronged package can better accommodate demographic-driven spending pressures while being more growth-friendly than single-tool approaches focused on social security contribution rate increases.
- Without policy adjustments, long-term fiscal sustainability is at risk due to rising age-related spending and consequent public debt increases.
IMF Working Paper: "Policy Challenges of Population Aging in Ireland", Working Paper No. 2007/247 (Dora M Iakova and Dennis P Botman), October 1, 2007.