Working Paper: NBER ID: w12147
Authors: David N. Weil
Abstract: Population aging is primarily the result of past declines in fertility, which produced a decades long period in which the ratio of dependents to working age adults was reduced. Rising old-age dependency in many countries represents the inevitable passing of this "demographic dividend." Societies use three methods to transfer resources to people in dependent age groups: government, family, and personal saving. In developed countries, families are predominant in supporting children, while government is the main source of support for the elderly. The most important means by which aging will affect aggregate output is the distortion from taxes to fund PAYGO pensions.
Keywords: Population Aging; Economic Effects; Dependency Ratios; Government Transfers
JEL Codes: J10; J11; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| population aging (J11) | increase in old-age dependency ratio (J14) |
| decrease in working-age population (J11) | increase in old-age dependency ratio (J14) |
| increase in old-age dependency ratio (J14) | strain on government budgets (H60) |
| increased elderly wealth (D14) | decreased savings among younger population (D14) |
| declining fertility (J13) | decrease in youth dependency ratio (J13) |
| declining fertility (J13) | increase in old-age dependency ratio (J14) |