Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-28T03:22:13.208Z Has data issue: false hasContentIssue false

18 - Socio-Economic Consequences of Increased Longevity in Contemporary Populations

Published online by Cambridge University Press:  14 November 2024

By
Miguel Sánchez-Romero  and
Alexia Prskawetz
Edited by
Jean-François Lemaître  and
Samuel Pavard
Jean-François Lemaître
Affiliation:
Centre National de la Recherche Scientifique (CNRS)
Samuel Pavard
Affiliation:
National Museum of Natural History, Paris
Get access

Summary

Increase in life expectancy will affect future welfare through changes in the stock of human capital and financial wealth. In projecting these changes it is important to differentiate between the direct demographic effect (a change in the population age structure) and the indirect behavioural change (a change in age-specific economic characteristics). Using a multi-country dynamic (general equilibrium) economic model, this chapter assesses the effects of increasing life expectancy on economic growth and inequality in European countries. The economic model accounts for both the direct effect of changes in the age structure of the population, given the economic characteristics, and the indirect effect of population changes on age-specific economic behaviour in a globalized economy. Projections for the period 2020-2100 show that future life expectancy improvements: (1) will have a negative impact on consumption and output per capita; (2) will negatively affect the accumulation of assets (more so in high-income compared to middle-income European countries due to the more generous pension systems in high-income countries); and (3) will lead to an increase in the intergenerational income inequality due to the fall in asset income at old age. However, it also finds that more generous old-age public transfer systems mitigate the negative impact of life expectancy gains on inequality.

Keywords

longevityeconomic growthincome inequalityNational Transfer Accountsgeneral equilibrium model
Type
Chapter
Information
The Biodemography of Ageing and Longevity , pp. 353 - 374
Publisher: Cambridge University Press
Print publication year: 2024

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Sánchez-Romero, M. 2022. Assessing the generational impact of COVID-19 Using National Transfer Accounts (NTAs). Vienna Yearb. Popul. Res. 20, 1–35 (doi:10.1553/populationyearbook2022.res1.2).Google Scholar
Mason, A., Lee, R., Members of the NTA Network. 2022. Six ways population change will affect the global economy. Popul. Dev. Rev. 48, 51–73 (doi:10.1111/padr.12469).CrossRefGoogle ScholarPubMed
Leon, D.A. 2011. Trends in European life expectancy: a salutary view. Int. J. Epidemiol. 40, 271–277.CrossRefGoogle ScholarPubMed
Mackenbach, J.P., Looman, C.W. 2013. Life expectancy and national income in Europe, 1900–2008: an update of Preston’s analysis. Int. J. Epidemiol. 42, 1100–1110.CrossRefGoogle ScholarPubMed
Lutz, W., Goujon, A., Stonawski, M., Stilianakis, N., Samir, K. 2018. Demographic and Human Capital Scenarios for the 21st Century: 2018 Assessment for 201 Countries Publications Office of the European Union.Google Scholar
Kelley, A.C., Schmidt, R.M. 2005. Evolution of recent economic-demographic modeling: a synthesis. J. Popul. Econ. 18, 275–300.CrossRefGoogle Scholar
Bloom, D.E., Williamson, J.G. 1998. Demographic transitions and economic miracles in emerging Asia. World Bank Econ. Rev. 12(3), 419–455.CrossRefGoogle Scholar
Lee, S.H., Ogawa, N. 2011. Labour income over the lifecycle. Popul. Aging Gener. Econ. 109–135.Google Scholar
Gruber, J., Wise, D.A. 1999. Social Security and Retirement around the World. University of Chicago Press.Google Scholar
OECD (Organisation for Economic Co-operation and Development. 2019. Pensions at a Glance 2019: OECD and G20 Indicators. OECD Publishing.Google Scholar
d’Albis, H., Lau, S.-H.P., Sánchez-Romero, M. 2012. Mortality transition and differential incentives for early retirement. J. Econ. Theory 147, 261–283.CrossRefGoogle Scholar
Restuccia, D., Vandenbroucke, G. 2013. A century of human capital and hours. Econ. Inq. 51, 1849–1866.CrossRefGoogle Scholar
Sánchez-Romero, M., d’Albis, H., Prskawetz, A. 2016. Education, lifetime labour supply, and longevity improvements. J. Econ. Dyn. Control 73, 118–141.CrossRefGoogle Scholar
Kalemli-Ozcan, S., Weil, D. 2010. Mortality change, the uncertainty effect, and retirement. J. Econ. Growth 15, 65–91.CrossRefGoogle ScholarPubMed
Ben-Porath, Y. 1967. The production of human capital and the life cycle of earnings. J. Polit. Econ. 75(4), 352–365.CrossRefGoogle Scholar
Lee, C. 2001. The expected length of male retirement in the United States, 1850–1990. J. Popul. Econ. 14, 641–650 (doi:10.1007/s001480100064).CrossRefGoogle Scholar
Bleakley, H. 2007. Disease and development: evidence from hookworm eradication in the American South. Q. J. Econ. 122(1), 73–117.CrossRefGoogle ScholarPubMed
Field, E., Robles, O., Torero, M. 2009. Iodine deficiency and schooling attainment in Tanzania. Am. Econ. J. Appl. Econ. 1, 140–169.CrossRefGoogle Scholar
Mason, A., Ogawa, N., Chawla, A., Matsukura, R. 2011. Asset-based flows from a generational perspective. In Population Aging and the Generational Economy (eds Lee, R., Mason, A.), pp. 209–236. Edward Elgar.Google Scholar
Coale, A.J., Hoover, E. 1958. Population Growth and Economic Development in Low-Income Countries. Princeton University Press.Google Scholar
Modigliani, F., Ando, A.K. 1957. Tests of the life cycle hypothesis of savings: comments and suggestions 1. Bull. Oxf. Univ. Inst. Econ. Stat. 19, 99–124.CrossRefGoogle Scholar
Lee, R.D., Mason, A. 2011. Population Aging and the Generational Economy: A Global Perspective. Edward Elgar.CrossRefGoogle Scholar
Willis, R.J. 1988. Life cycles, institutions and population growth: a theory of the equilibrium interest rate in an overlapping-generations model. In Economics of Changing Age Distributions in Developed Countries (eds Lee, R.D., Arthur, W.B., Rogers, G.), pp. 106–138. Oxford University Press.Google Scholar
Lee, R.D. 1994. Age structure, intergenerational transfer, and wealth: a new approach, with applications to the United States. J. Hum. Resour. 29, 1027–1063.CrossRefGoogle Scholar
Bommier, A., Lee, R.D. 2003. Overlapping generations models with realistic demography. J. Popul. Econ. 16(1), 135–160.Google Scholar
Lee, R.D. 2016. Macroeconomics, aging, and growth. In Handbook of the Economics of Population Aging, vol. 1, pp. 59–118. North-Holland. Elsevier.Google Scholar
Sánchez-Romero, M. 2013. The role of demography on per capita output growth and saving rates. J. Popul. Econ. 26, 1347–1377 (doi:10.1007/s00148-012-0447-3).CrossRefGoogle Scholar
Sánchez-Romero, M., Abio, G., Patxot, C., Souto, G. 2018. Contribution of demography to economic growth. SERIEs 9, 27–64 (doi:10.1007/s13209-017-0164-y).CrossRefGoogle Scholar
Lee, R.D., Mason, A. 2011. Population Aging and the Generational Economy: A Global Perspective. Edward Elgar.CrossRefGoogle Scholar
European Commission. 2020. The 2021 ageing report: underlying assumptions and projection methodologies. European Commission Institutional Paper 142 (doi:10.2765/733565).CrossRefGoogle Scholar
Wittgenstein Centre for Demography and Global Human Capita 2018. Wittgenstein Centre Data Explorer Version 2.0. www.wittgensteincentre.org/dataexplorer.Google Scholar
Mason, A., Lee, R.D. 2007. Transfers, capital, and consumption over the demographic transition. In Population Aging, Intergenerational Transfers and the Macroeconomy (eds Clark, R., Mason, A., Ogawa, N.), pp. 128–162. Edward Elgar.Google Scholar
Lee, R., Mason, A. 2010. Fertility, human capital, and economic growth over the demographic transition. Eur. J. Popul. Rev. Eur. Démographie 26, 159–182 (doi:10.1007/s10680-009-9186-x).CrossRefGoogle ScholarPubMed
Börsch-Supan, A., Ludwig, A., Winter, J. 2006. Ageing pension reform and capital flows: a multi-country simulation model. Economica 73(292), 625–658.CrossRefGoogle Scholar
Piketty, T. 2018. Capital in the Twenty-First Century. Harvard University Press.Google Scholar
Cervellati, M., Sunde, U. 2013. Life expectancy, schooling, and lifetime labour supply: theory and evidence revisited. Econometrica 81(5), 2055–2086.Google Scholar
Lee, R.D., Mason, A. 2014. Is low fertility really a problem? Population aging, dependency, and consumption. Science 346, 229–234.CrossRefGoogle ScholarPubMed
Sánchez-Romero, M., Wrzaczek, S., Prskawetz, A., Feichtinger, G. 2018. Does demography change wealth inequality? In Control Systems and Mathematical Methods in Economics (eds Feichtinger, G., Kovacevic, R., Tragler, G.), pp. 349–375. Springer.CrossRefGoogle Scholar
Lam, D. 1986. The dynamics of population growth, differential fertility, and inequality. Am. Econ. Rev. 76, 1103–1116.Google Scholar
United Nations Department of Economic and Social Affairs, Population Division. 2019. World Population Prospects 2019 (online ed. rev. 1). https://population.un.org/wpp2019.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×