Jorgensen, Ole Hagen
Macroeconomic and policy implications of population aging in Brazil Ole Hagen Jorgensen [electronic resource] / Ole Hagen Jorgensen - Washington, D.C., The World Bank, 2011 - 1 online resource (36 p.) - Policy research working papers. World Bank e-Library. .
This paper analyzes the macroeconomic implications of population aging in Brazil. Three alternative yet complementary methodologies are adopted, and depending on policy responses to the fiscal implications of aging, there are two main findings: First, saving rates could increase and not necessarily fall as a consequence of aging in Brazil-thus contradicting conventional views. Second, lifetime wealth across generations could increase-as capital deepening generates a second demographic dividend. Two policy responses to aging are emphasized: First, a structural policy response of linking mandatory retirement (or entitlement) ages to increasing life expectancy would boost labor supply and reduce the fiscal costs of aging. Second, in terms of preferable parametric policy responses, the second demographic dividend will be promoted to the highest extent by keeping taxes and debt unchanged while allowing public pensions to adjust downward. Such a policy response would keep pensions from further crowding out private saving-thus balancing capital accumulation with intergenerational income distribution. In conclusion, Brazil will not necessarily experience a fall in saving and growth, but if government policies are appropriately, adequately, and timely formulated, population aging is likely to lead to substantial capital deepening and increases in lifetime income, wealth, and welfare.
10.1596/1813-9450-5519
Access to Finance
Debt
Debt Markets
Demographic dividend
Economic growth
Economic Theory & Research
Emerging Markets
Fiscal policy
Labor Supply
Macroeconomics and Economic Growth
Population aging
Population Policies
Retirement age
Saving
Brazil
Macroeconomic and policy implications of population aging in Brazil Ole Hagen Jorgensen [electronic resource] / Ole Hagen Jorgensen - Washington, D.C., The World Bank, 2011 - 1 online resource (36 p.) - Policy research working papers. World Bank e-Library. .
This paper analyzes the macroeconomic implications of population aging in Brazil. Three alternative yet complementary methodologies are adopted, and depending on policy responses to the fiscal implications of aging, there are two main findings: First, saving rates could increase and not necessarily fall as a consequence of aging in Brazil-thus contradicting conventional views. Second, lifetime wealth across generations could increase-as capital deepening generates a second demographic dividend. Two policy responses to aging are emphasized: First, a structural policy response of linking mandatory retirement (or entitlement) ages to increasing life expectancy would boost labor supply and reduce the fiscal costs of aging. Second, in terms of preferable parametric policy responses, the second demographic dividend will be promoted to the highest extent by keeping taxes and debt unchanged while allowing public pensions to adjust downward. Such a policy response would keep pensions from further crowding out private saving-thus balancing capital accumulation with intergenerational income distribution. In conclusion, Brazil will not necessarily experience a fall in saving and growth, but if government policies are appropriately, adequately, and timely formulated, population aging is likely to lead to substantial capital deepening and increases in lifetime income, wealth, and welfare.
10.1596/1813-9450-5519
Access to Finance
Debt
Debt Markets
Demographic dividend
Economic growth
Economic Theory & Research
Emerging Markets
Fiscal policy
Labor Supply
Macroeconomics and Economic Growth
Population aging
Population Policies
Retirement age
Saving
Brazil