Modelling the Effect of Population Ageing on Government Social Expenditures

Arbeitspapier

This paper reviews and extends a new framework, developed by Razin, Sadka, and Swagel, for capturing the effect of population ageing on public support for government social expenditures. Razin et al construct up an overlapping generations, median voter model, and investigate the empirical applicability of the model using panel data from 13 OECD countries. Their results suggest that population ageing will put downward pressure on per capita expenditures. These results rest, however, on an assumption that there is only one dependant age group: the old. This paper investigates the consequences of allowing for two such age groups: the young and the old. A replication of Razin et al's empirical analysis, using two dependent age groups rather than one, suggests that population ageing will instead put upward pressure on per capita expenditures. Although these results are tentative, they illustrate the usefulness of including both youth dependency and old-age dependency in Razin et al's framework.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: New Zealand Treasury Working Paper ; No. 03/15

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Fiscal Policy ; Demographic Trends, Macroeconomic Effects, and Forecasts
• Subject: Social expenditures ; Median voter models ; Population Ageing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bryant, John
• Event: Veröffentlichung
• (who): New Zealand Government, The Treasury
• (where): Wellington
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/205520
• Last update: 10.03.2025, 11:45 AM CET