Demographic Change and Fiscal Sustainability in Asia

Changes in the population age structure can have significant effects on fiscal sustainability since they can affect both government revenue and expenditure. In this paper, we project government revenue, expenditure, and fiscal balance in developing Asia up to 2050 using a simple stylized model and t...

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Bibliographic Details
Published in:Social indicators research 2017-10, Vol.134 (1), p.287-322
Main Authors: Lee, Sang-Hyop, Kim, Jungsuk, Park, Donghyun
Format: Article
Language:English
Subjects:
Age distribution
Aging
Demographic change
Demographics
Deterioration
Economic growth
Economic models
Expenditures
Government
Government revenue
Human Geography
Microeconomics
Population aging
Public Health
Quality of Life Research
Revenue
Social research
Social Sciences
Sociology
Sustainability
Taxation
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Summary:Changes in the population age structure can have significant effects on fiscal sustainability since they can affect both government revenue and expenditure. In this paper, we project government revenue, expenditure, and fiscal balance in developing Asia up to 2050 using a simple stylized model and the National Transfer Accounts data set. Rapidly aging countries are likely to suffer a tangible deterioration of fiscal sustainability under their current tax and expenditure system. On the other hand, rapid economic growth can improve fiscal health in poorer, relatively young countries with still-growing workingage populations. Overall, our results indicate that Asia’s population aging will adversely affect its fiscal sustainability, pointing to a need for Asian countries to further examine the impact of demographic shifts on their fiscal health.
ISSN:0303-8300
1573-0921
DOI:10.1007/s11205-016-1424-0