Analysis of the macroeconomic effects of population ageing using a general equilibrium model

Abstract

The macroeconomic effects of population ageing will be considerable. Projections with a general equilibrium model highlight a structural shift in the economy and a pronounced fall in the standard of living in the wake of population ageing. Total output will decline not only in response to a fall in labour input but also due to a shift in the output structure towards service sectors. A substantial increase in the tax ratio will, in practice, make labour markets other than the public labour market wither away, while the ratio of private consumption to GDP will fall permanently.