The Fiscal Consequences of Shrinking Populations
Open accessAbstract
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.
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These changes in age structure are likely to present considerable economic challenges caused by a growing dependency ratio and a shrinking labour force.
“These changes in age structure are likely to present considerable economic challenges caused by a growing dependency ratio of older to working-age population and a shrinking labour force.41, 42”
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- Authors
- Clements, B., Dybczak, K., Gaspar, V., Gupta, S., & Soto, M.
- Venue
- Staff Discussion Notes
- Publisher
- International Monetary Fund (IMF)
- Published
- 2015-10
- Volume
- 2015
- Issue
- 021
- Pages
- 1
- ISSN
- 2221-030X (ISSN-L)
- 2617-6750
- OpenAlex
- W2297922422
- Cited by
- 59
- References
- 36
- Citations by year
- 2026: 4 · 2024: 2 · 2023: 4 · 2022: 1 · 2021: 12 · 2020: 4 · 2019: 7 · 2018: 10 · 2017: 8 · 2016: 7
- FWCI
- 20.12
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- IMF staff discussion note (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Fiscal Policies and Political Economy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Policies and Impacts
- Health Sciences › Health Professions › General Health Professions › Global Health Care Issues
- Keywords
- population decline, population aging, fiscal sustainability, pension expenditure, health spending, entitlement reform, demographic change, labor market, tax system, public spending efficiency, population projections, fiscal risk
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