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On the Demographics and the Severity of the Social Security Crisis

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  • Gahramanov Emin

    (Department of Economics, American University of Sharjah, University City, Sharjah, United Arab Emirates)

Abstract

Changing demographics across the world threatens the sustainability of pension benefits. Yet there is widespread sentiment among some business and policy analysts that in the presence of population ageing, more elderly people would mean more old-age consumption and robust business opportunities across all spending dimensions. In this paper we look at a micro-level analysis of intertemporal consumption/saving behavior, and find that in the presence of notable heterogeneity with respect to the consumer impatience and rationality degree, different demographic challenges and likely policy responses would imply greatly varying and significant consumption changes at old age. We also touch upon the associated issues of welfare analysis and transitional effects and discuss various complexities and challenges for policy implications and economic projections.

Suggested Citation

  • Gahramanov Emin, 2016. "On the Demographics and the Severity of the Social Security Crisis," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 1001-1028, April.
    • Handle: RePEc:bpj:bejeap:v:16:y:2016:i:2:p:1001-1028:n:12
    DOI: 10.1515/bejeap-2015-0098
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    References listed on IDEAS

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    More about this item

    Keywords

    pension crisis; perfect foresight; rule of thumb; baby boom; life expectancy;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D6 - Microeconomics - - Welfare Economics

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