Abstract.Day4.RLee

Population Aging in the ESCAP Region and its Economic and Intergenerational Consequences

Ronald Lee

Some ESCAP countries are benefiting now from demographic dividends but will soon be joining others that are rapidly aging. GDP growth will slow, but the effect on individual welfare is less clear. the economic impact depends on whether elderly fund their consumption through their labor and asset income, or through familial or public intergenerational transfers. Close examination of longitudinal and cross-sectional NTAs for the ESCAP countries is revealing. Typically, the growing public transfer systems are replacing traditional family systems. These public programs help achieve SDGs, but are vulnerable to population aging. Pronatalist policies, if successful, would actually raise fiscal pressures and general dependency loads for many decades before they begin to help. Sharing costs of population aging through higher taxes and later retirement ages is necessary although unpopular. Incentivizing asset accumulation and continuing labor supply by the increasingly healthy elderly will reduce the need for transfers in the future.