Search results for: Demographic change
Marga Peeters & Loek Groot, World Economics, June 2012
This paper investigates the fiscal pressure, or the level of public expenditure on old and young economically inactive people, arising from demographic change in relation to the labour market space, or the proportion of the working age population not in full-time employment. The exercise is carried out for 50 countries that cover 75% of the world population. The pressure-to-space indicator ranks Poland, Turkey and Greece high, although, apart from Turkey and India, developing countries generally rank low due to low spending on the old (pensions, healthcare) and on the young (education, family costs). Peculiarly, economies with higher pressure have more space. The hypothesis that ageing economies have started using their labour market space in anticipation of higher demographic pressure is rejected. It is important to note that raising the retirement age in developed economies by five years alleviates fiscal pressure by almost 30% and creates 10% more labour market space.
Guonan Ma & Wang Yi, World Economics, March 2011
China’s saving rate is high from many perspectives – historical experience, international standards and model predictions. Furthermore, the average saving rate has been rising over time, with much of the increase taking place in the 2000s. What sets China apart from the rest of the world is that its rising aggregate saving has reflected high savings rates in all three sectors: corporate, household and government. Our evidence casts doubt on the proposition that distortions and subsidies account for China’s high saving rate. Instead, we argue that tough corporate restructuring (including pension and home ownership reforms), a marked Lewismodel transformation process (where the average wage exceeds the marginal product of labour in the subsistence sector) and rapid ageing process have all played more important roles. Such structural factors suggest that the Chinese saving rate may peak over the coming years.
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