Global aging and public finance

Abstract

The world is getting older, and the rate of aging, as well as the composition of aging, has important global policy implications for public finance. We’re witnessing a speeding-up of the share of elderly in developing countries. It’s important to think about fiscal stress from aging in two ways. Aging from above results in changes in social expenditures. This is going to lead to increases in health expenditures, increases in pension expenditures, and decreases in education expenditures. Aging from below leads to changes in revenues as workers decline relative to the total population. I want to “right-size” spending on health care, pensions, and welfare. Let’s talk about our public policy values and goals and figure out what we can afford, and what that means, and who needs it.