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Future Global Capital Shortages: Some Key Issues and Policy Recommendations
Population aging was unknown before the middle of the 20th century. Nowadays developed countries are in unprecedented transition to a new era with aging populations. Aging will result in a smaller proportion of the population being employed in the decades after 2010/2020. Another primary issue which may harm industrialized economies is whether aging and particularly pay-as-you-go based pension systems will depress saving and investment. Changing demography, fewer workers and more retirees, gives rise to much concern on the fiscal sustainability of public pension schemes, health care systems and other social services1. As a result pension reform is in discussion in all develo- ped countries. The main features of the debate of the relationships between popu- lation aging, labour supply and saving behaviour are summarized. Technological development, economic globalization and institutional changes are long-term processes occurring over the same time period as population aging. Under the plausible assumption that 2 percent yearly growth in per worker production can be realized in the coming two decades and 1 percent in the years after 2020, it can be demonstrated that per capita consumption of the working population increa- ses from 1995 to 2020 by 80,6 percent and that of the 65+-population by 125 percent. Only with a zero growth rate of labour productivity average welfare will decrease by about 8 percent, whereas a minor 0.4 percent productivity growth with unchanged labour participation rate suffices to maintain welfare at its present level.
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