Here's a paper from Laurence Kotlikoff, Hans Fehr and Sabine Jokisch published last February: Aging, the World Economy and the Coming Generational Storm. I'm just really bookmarking this at present. They seem even more scare and doomy than I do. Their big question is:
"What can be done to avoid a very unpleasant future?"
I certainly wouldn't go this way. Apart from anything else I think this dramatisation is counter productive (I am learning).
So I would avoid this:
"The developed world is about to experience an unprecedented demographic change. In virtually all developed countries, people are getting older — a lot older. And everywhere the reason is the same — a dramatic baby boom followed by an equally dramatic baby bust, all accompanied by a remarkable increase in life expectancy. Over the next 30 years, the number of elderly in the United States, Europe and Japan will more than double. At the same time, the number of workers available to pay the elderly’s governmentguaranteed pension and health care benefits will rise by less than 10 percent. The fiscal implications of these two demographic trends are alarming."
However it is important to note that they make some very conservative assumptions:
"In making these estimates, we assume that the fall in fertility rates will reverse over time and that women will eventually have enough children to replace the current population - the exact opposite of recent trends. We also assume that the growth of health care costs per beneficiary will match the rate of growth of per capita real wages - even though they have grown many times faster in recent years. As a result of these very conservative modeling assumptions, the results reported here err on the side of optimism. Reality is likely to be far worse."
Here I agree, especially on the fertility issue in very low fertility countries, where I think we are much more locked-in to low levels over a long horizon than people imagine. Anyway, one to go over with a fine toothcomb, especially the immigartion section, which looks problematic to me at first glance.
Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.