The Economics of an Ageing Population studies the effects of demographic transition on the economics of industrialised countries. The authors demonstrate that an ageing population does not necessarily lead to a reduction in growth, providing that the working population are more productive and save a greater percentage of their income. They look in detail at the examples of Italy and Japan, two countries which have the fastest ageing populations in Europe and the world respectively. The book begins by studying the past decade of stagflation in Japan. The authors argue that a reduction in innovation, shorter working hours and saturation of demand are to blame for the slow-down in growth, rather than demographic transition. They move on to investigate pension reforms in different countries and their macroeconomic effects on the redistribution of consumption between workers and retirees. They provide tools to compare different pension types (public pay-as-you-go versus privately funded) and argue that alternative pension systems should be evaluated according to their ability to increase potential output growth.
Finally, the authors present an empirical model to simulate the impact on the world economy of interactions between countries in different phases of demographic transition. A rapidly ageing population is a problem which, before too long, will face most industrialised countries in the world. This book provides some of the answers to the difficult decisions governments and citizens will have to make. It will be required reading for academics and researchers with an interest in macroeconomics, demographics and public finance, and professional economists working in insurance houses, commercial banks and financial institutions.