The Economics of an Ageing Population: Macroeconomic Issues (Esri Studies Series on Ageing)

449 Pages·2004·2.47 MB·English

by  Paolo Onofri

The Economics of an Ageing Population
ESRISTUDIESSERIES ON AGEING
Editorial Board
Olivia S.Mitchell,Executive Director,Pension Research Council,International
Foundation ofEmployee Benefit Plans and Professor ofInsurance and Risk
Management,Wharton School,University ofPennsylvania,US
Ralph C.Bryant,Senior Fellow,The Brookings Institution,US
Paolo Onofri,Professor ofEconomics and Director,Department ofEconomics,
University ofBologna and General Secretary,Prometeia Associates,Italy
Koichi Hamada,Professor ofEconomics,Yale University,USA and former
President,Economic and Social Research Institute,Japanese Cabinet Office,Japan
Hiromi Kato,Deputy Director General,Economic Assessment and Policy Analysis
and former Executive Research Fellow,Economic and Social Research Institute,
Japanese Cabinet Office,Japan
In April 2000 the Japanese government launched a series of comprehensive,
interdisciplinary and international research projects called ‘the Millennium
Projects’and as part of this initiative the Economic and Social Research Institute
(ESRI) of the Cabinet Office of Japan initiated a two year project entitled ‘A
Study on Sustainable Economic and Social Structures in the 21st Century’,which
focuses on ageing and environmental problems in the Japanese and international
context.
The ESRI Studies Series on Ageingprovides a forum for the publication of a
limited number of books,which are the result of this international collaboration,
on the three main issues of macroeconomics,pension and social security reform,
and the labour market.The series is invaluable to students and scholars of public
economics and public finance as well as policymakers and consultants.
Titles in the series include:
The Economics of Social Security in Japan
Edited by Toshiaki Tachibanaki
The Economic Impacts of Population Ageing in Japan
Landis MacKellar,Tatiana Ermolieva,David Horlacher and Leslie Mayhew
The Economics of an Ageing Population
Edited by Paolo Onofri
The Economics of an
Ageing Population
Macroeconomic Issues
Edited by
Paolo Onofri
Professor of Economics and Director of the Department of
Economics,University of Bologna,and General Secretary,
Prometeia Associates,Italy
THEESRI STUDIES SERIES ON AGEING
Edward Elgar
Cheltenham,UK • Northampton,MA,USA
© Paolo Onofri 2004
All rights reserved.No part of this publication may be reproduced,stored in
a retrieval system or transmitted in any form or by any means,electronic,
mechanical or photocopying,recording,or otherwise without the prior
permission of the publisher.
Published by
Edward Elgar Publishing Limited
Glensanda House
Montpellier Parade
Cheltenham
Glos GL50 1UA
UK
Edward Elgar Publishing,Inc.
136 West Street
Suite 202
Northampton
Massachusetts 01060
USA
A catalogue record for this book
is available from the British Library
Library ofCongress Cataloguing in Publication Data
The economics of an ageing population :macroeconomic issues / edited by
Paolo Onofri.
p.cm.— (The ESRI studies series on ageing)
Includes index.
1.Age distribution (Demography).2.Economic development.3.Pensions.
I.Title:Economics of an ageing population.II.Onofri,Paolo.III.Series.
HB1531.E27 2004
339(cid:1).084(cid:1)6—dc22 2004042672
ISBN1 84376 779 1
Printed and bound in Great Britain by MPG Books Ltd,Bodmin,Cornwall
Contents
List of contributors vii
Preface ix
Acknowledgments xv
Introduction xvi
PARTI DEMOGRAPHIC TRANSITION AND THE IMPACT
ONGROWTH:THE CASE OF JAPAN
1 Economic growth under the demographic transition:a theory
andsome international evidence 3
Shin-ichi Fukuda and Ryoko Morozumi
2 The 1990s in Japan:a lost decade 35
Fumio Hayashi and Edward C.Prescott
3 Effects of information technology and ageing workforce on
labordemand and technological progress in Japanese
industries:1980–1998 75
Futoshi Kurokawa,Kazunori Minetaki,Kiyohiko G.Nishimura
and Masato Shirai
4 Demand saturation – creation and economic growth 157
Masanao Aoki and Hiroshi Yoshikawa
PART II DEMOGRAPHIC TRANSITION AND PENSION
SYSTEMS
5 Distributional impact of social security reform 193
Barry Bosworth,Gary Burtless and Claudia Sahm
6 Asset accumulation and retirement income under individual
retirement accounts:evidence from five countries 227
Gary Burtless
7 Pension reforms,tax incentives and saving in Italy 251
Massimo Baldini,Paolo Bosi,Maria Cecilia Guerra,Carlo
Mazzaferro and Paolo Onofri
v
vi Contents
PART III THE IMPACT OF THE DEMOGRAPHIC TRANSITION
ON THE WORLD ECONOMY
8 Incorporating demographic change in multi-country
macroeconomicmodels:some preliminary results 349
Ralph C.Bryant and Warwick J.McKibbin
Index 409
Contributors
Masanao Aoki,University of California,Los Angeles,CA,USA.
Massimo Baldini,University of Modena-Reggio Emilia,and Prometeia
Associates,Italy.
Paolo Bosi,University of Modena-Reggio Emilia,and Prometeia
Associates,Italy.
Barry Bosworth,The Brookings Institution,Washington,DC,USA.
Ralph C.Bryant,The Brookings Institution,Washington,DC,USA.
Gary Burtless,The Brookings Institution,Washington,DC,USA.
Shin-ichi Fukuda,University of Tokyo,Japan.
Maria Cecilia Guerra,University of Modena-Reggio Emilia,and
Prometeia Associates,Italy.
Fumio Hayashi,University of Tokyo,Japan.
Futoshi Kurokawa,University of Tokyo,Japan.
Carlo Mazzaferro,University of Bologna,and Prometeia Associates,
Italy.
Warwick J.McKibbin,The Brookings Institution,Washington,DC,USA
and Australian National University,Canberra,Australia.
Kazunori Minetaki,Fujitsu Research Institute,Tokyo,Japan.
Ryoko Morozumi,University of Tokyo,Japan.
Kiyohiko G.Nishimura,University of Tokyo,Japan.
vii
viii Contributors
Paolo Onofri,University of Bologna,and Prometeia Associates,Italy.
Edward C.Prescott,University of Minnesota,Minneapolis,MN,USA.
Claudia Sahm,University of Michigan,Ann Arbour,MI,USA.
Masato Shirai,Meiji Gakuin University,Tokyo,Japan.
Hiroshi Yoshikawa,University of Tokyo,Japan.
Preface
At the beginning of the twenty-first century the world must place the
highest priority on constructing a sustainable socioeconomic system that
can cope with the rapid ageing of populations in developed countries and
with the limited environmental resources available in both developed and
developing countries.At first glance,the problems of ageing and the envi-
ronment may seem to be quite separate issues. However, they share a
common feature: they both deal with intergenerational problems. The
essence of the ageing problem is how to find effective ways for a smaller,
working generation to support a larger,ageing generation.The crux of the
environmental problem is to find a feasible way to leave environmental
resources to future generations.Moreover,in terms ofconsumption,slower
population growth may slow consumption and help to alleviate environ-
mental problems.On the other hand,a rapidly ageing society may use more
energy-intensive technology to compensate for the inevitable labor short-
age,and thus cause deterioration on the natural environment.
Today, these concerns are highly applicable in Japan. The pressure
created by the rapid ageing of the Japanese population is becoming acute;
Japan must construct a sustainable society that does not create intergener-
ational inequity or erode the public welfare.At the same time,Japan cannot
deplete its environmental resources and energy,as this would leave future
generations with an unbearably heavy burden.
The Japanese government has recognized the vital importance of both
problems. To explore and implement solutions for this difficult task, in
April 2000 former Prime Minister Keizo Obuchi launched several compre-
hensive and interdisciplinary research projects known collectively as the
‘Millennium Project’.As a consequence in the same month,the Economic
and Social Research Institute (ESRI), Cabinet Office, Government of
Japan, initiated a two-year project entitled ‘A Study on Sustainable
Economic and Social Structure in the Twenty-first Century’. While the
Millennium Project covers a wide range of topics and disciplines such as
natural science and technological innovation, the project conducted by
ESRI places major emphasis on social science.While taking into account
technological innovation and feasibility,it focuses on ageing and environ-
mental problems. It aims to design a desirable socioeconomic structure
under the pressure of an ageing population and environmental constraints
ix