Publication: Macroeconomic and Policy Implications of Population Aging in Brazil
Date
2011-01-01
ISSN
Published
2011-01-01
Author(s)
Jorgensen, Ole Hagen
Abstract
This paper analyzes the macroeconomic
implications of population aging in Brazil. Three
alternative yet complementary methodologies are adopted, and
depending on policy responses to the fiscal implications of
aging, there are two main findings: First, saving rates
could increase and not necessarily fall as a consequence of
aging in Brazil -- thus contradicting conventional views.
Second, lifetime wealth across generations could increase --
as capital deepening generates a second demographic
dividend. Two policy responses to aging are emphasized:
First, a structural policy response of linking mandatory
retirement (or entitlement) ages to increasing life
expectancy would boost labor supply and reduce the fiscal
costs of aging. Second, in terms of preferable parametric
policy responses, the second demographic dividend will be
promoted to the highest extent by keeping taxes and debt
unchanged while allowing public pensions to adjust downward.
Such a policy response would keep pensions from further
crowding out private saving -- thus balancing capital
accumulation with intergenerational income distribution. In
conclusion, Brazil will not necessarily experience a fall in
saving and growth, but if government policies are
appropriately, adequately, and timely formulated, population
aging is likely to lead to substantial capital deepening and
increases in lifetime income, wealth, and welfare.
Citation
“Jorgensen, Ole Hagen. 2011. Macroeconomic and Policy Implications of Population Aging in Brazil. Policy Research working paper ; no. WPS 5519. © http://hdl.handle.net/10986/3292 License: CC BY 3.0 IGO.”
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