TITLE:
The Economic Challenges of Population Aging in Emerging Markets
AUTHORS:
Michael Herrmann
KEYWORDS:
Population; Aging; National Transfer Accounts; Pensions; Social Protection; Macroeconomics; Structural Change
JOURNAL NAME:
Modern Economy,
Vol.5 No.2,
February
19,
2014
ABSTRACT:
Why do studies that examine population aging always come
to the same conclusions? Regardless of whether these studies focus on Japan or
Germany, Northern Europe or Southern Europe, the developed economies or emerging market economies, they typically suggest that countries will confront a labor
shortage which undermines economic growth and that they will confront rising
pension and health care costs which call for reduced health care and
pension benefits. Are uniform policy recommendations justified because these
countries are in fact so similar, or are they rather the result
of an undifferentiated and partial analysis? This paper argues that they
are the result of a household-focused analysis which fails to take into consideration the
very different macroeconomic realities of different countries. From a
macroeconomic perspective, this paper examines the broader economic background
of emerging markets to
understand whether population aging has negative effects on their economic
development on the one side, and whether their economic development can cater
to an increasing number of old-age dependents on the other.