Reports

Why the National Debt Still Matters

The federal debt held by the public reached 100 percent of GDP in 2020, up from 35 percent in 2007 on the eve of the Great Recession. According to the latest March 2021 CBO long-term budget projections, it will be approaching 200 percent of GDP by 2050, and there are good reasons to believe that this projection is optimistic. At least as startling as the debt projections themselves is the fact that so many economists seem unconcerned.  Why the National Debt Still Matters, a joint Concord Coalition/Global Aging Institute issue brief, explains why it is wishful thinking to suppose that America can continue to run up the national debt without grave risks, including a global financial crisis, a domestic fiscal crisis, and the long-term erosion of U.S. living standards. It also explains why CBO’s budget projections may greatly understate the future debt burden, and hence the dangers of failing to change course soon and decisively. 

From Longevity Leader to Longevity Laggard

Not so long ago, the United States was among the rich world’s longevity leaders.  Today it is its longevity laggard. From Longevity Leader to Longevity Laggard explores the reasons behind the startling U.S. slide in world life expectancy rankings.  It digs deep into the worrisome divergence in trends in morbidity and mortality by socioeconomic status, warning that America risks becoming two separate nations, one long-lived and one short-lived. Along the way, it also clears up the widespread confusion about the impact of COVID-19 on life expectancy. The good news is that the large pandemic-related reduction in life expectancy will almost certainly prove transitory. The bad news is that if we fail to confront the gathering health crisis afflicting much of America we may find out too late that stagnating or retrogressing life expectancy is the new normal. The issue brief is part of a series called Critical Issues which the Global Aging Institute is producing in collaboration with The Terry Group. 

The Macro Challenges of Population Aging

The dramatic shift in the age structure and growth rate of the U.S. population poses many challenges. As the ratio of elderly to working-age adults increases, fiscal burdens will rise. As the growth rate in the working-age population slows, so will employment growth and GDP growth. Productivity growth may also decline, and along with it growth in living standards. As the electorate ages, the social mood may come to be characterized by greater risk-aversion and shorter time horizons. As America’s population and economy grow more slowly, its geopolitical stature could diminish. The Macro Challenges of Population Aging, a joint Concord Coalition/Global Aging Institute issue brief, takes our readers on a guided tour of the macro challenges posed by the aging of the U.S. population. 

The End of U.S. Demographic Exceptionalism

Until recently, America’s relatively high fertility rate seemed to ensure that it would remain the youngest of the major developed countries for the foreseeable future, as well as the only one with a steadily growing workforce. But birthrates were already in a steep decline before the pandemic hit, and now have plunged to European levels.  The End of U.S. Demographic Exceptionalism digs deep into the story behind the new “baby bust,” exploring why birthrates have been falling, whether they are likely to rise again, and, if they don’t, what it means for the budget, the economy, and the position of the United States in the world order.  The issue brief is the first in a series called Critical Issues which the Global Aging Institute is producing in collaboration with The Terry Group. The series aims to provide timely and authoritative analysis of key demographic and economic trends and developments that are reshaping America and the world, and in particular the future environment for retirement and health care.

Asian Provident Funds: Meeting Tomorrow's Challenges

There is a large literature on the strengths and weaknesses of pay-as-you-go pension systems, and in particular the financing challenges they face as populations age.  There is an equally large literature on fully funded and privately managed personal account systems. Yet the dominant type of retirement system in much of Asia—the fully funded but government-managed provident fund—has received comparatively little attention from policy analysts. Asian Provident Funds: Meeting Tomorrow’s Challenges helps to fill this gap. The report, which the Global Aging Institute prepared for the World Bank, assesses the strengths and weaknesses of the provident fund model; evaluates the performance of three of Asia’s largest provident funds, India’s EPF, Indonesia’s JHT, Malaysia’s EPF; and identifies steps that they and other provident funds can take to improve retirement security in a rapidly developing and rapidly aging Asia.

Five Imperatives for an Aging America

On its current demographic and economic trajectory, America is headed toward a future of permanently slower growth, crushing fiscal burdens, and greatly diminished opportunity. Five Imperatives for an Aging America, a joint Concord Coalition/Global Aging Institute issue brief, lays out five steps that America can take to put the nation on track toward a more hopeful future. The first is to limit the extent of population aging by increasing the fertility rate and net immigration above today’s low levels. The second is to offset the demographic drag of population aging on economic growth by encouraging longer work lives and leveraging the productive potential of the elderly. The third is to control the growth in health-care spending, which is the main driver of long-term structural budget deficits. The fourth is to stabilize the national debt as a share of GDP. The fifth is to resist the rising tide of protectionism, which if unchecked will deprive an aging America of the immense benefits that can flow from open global capital markets and labor markets.

Are Health Spans Rising Along with Life Spans?

The aging of the United States threatens to usher in a new era of relentless fiscal pressure, economic stagnation, and growing intergenerational conflict that pits the interests of the old against those of the young.  Or does it? Some optimists believe that improvements in the health of the elderly could be a potential game-changer that both eases fiscal burdens by lowering health-care spending and boosts economic growth by facilitating longer work lives. Are Health Spans Rising along with Life Spans? reviews recent trends in the health of the elderly. The issue brief, which is the third in a joint Concord Coalition/Global Aging Institute series, concludes that there is indeed room for optimism that better health at older ages will facilitate longer work lives.  Unfortunately, there is much less reason to believe that it alone will have much impact on health-care spending. Difficult choices will still be required.

The Case for Longer Work Lives

Over the course of the postwar era, life spans and health spans have risen dramatically in the United States.  Yet far from working longer, people are retiring earlier. The Case for Longer Work Lives argues that nothing would do more to maintain economic and living standard growth in an aging America than unlocking the productive potential of the elderly. The issue brief, which is the second in a joint Concord Coalition/Global Aging Institute series, reviews recent trends in elderly labor-force participation, explores the economic, fiscal, and individual benefits of extending work lives, and suggests constructive steps that business and government can take to encourage longer work lives. The good news is that America has already made a start. After bottoming out in the 1990s, elderly labor-force participation has once again begun to rise. America’s success in building on the momentum may well determine whether it prospers while it ages.

America's Demographic Future

The Concord Coalition and the Global Aging Institute (GAI) have joined forces to produce The Shape of Things to Come, a quarterly issue brief series that explores the fiscal, economic, social, and geopolitical implications of the aging of America.  In America’s Demographic Future, the inaugural issue, we discuss the U.S. demographic outlook and the underlying forces shaping it, including recent trends in fertility, life expectancy, and net immigration.  The good news is that America is not currently projected to age as much as many of its developed-world peers. The bad news is that the relatively favorable U.S. demographic outlook is deteriorating.  America’s unusually large Baby Boom, moreover, means that its age wave is rolling in unusually fast.  The fiscal and economic shock may thus be as large or even larger than in many countries due to age more than America is.

Meeting India's Retirement Challenge

With just one in eight workers earning a contributory pension benefit of any kind, the reach of India’s formal retirement system is limited, even by emerging market standards. The majority of workers, most of whom labor in India’s vast informal sector, have little to fall back on for support in old age except the extended family. But traditional family support networks are already under stress from the forces of modernization, and will soon come under intense new demographic pressure from declining family size. Meeting India’s Retirement Challenge describes the contours of India's gathering crisis in retirement security, assesses the strengths and weaknesses of its pension programs, and offers a blueprint for how a rapidly aging and rapidly developing India can build a more inclusive and adequate retirement system.

Voluntary Pensions in Emerging Markets:
New Strategies for Meeting the Retirement Security Challenge

A retirement crisis of immense proportions looms in the future of many of today’s emerging markets  As birthrates decline and life expectancy rises, emerging markets with pay-as-you-go state pension systems are being compelled to make dramatic reductions in the generosity of future retirement provision that threaten to undermine the living standards of middle-class retirees. While emerging markets with funded state pension systems are better insulated from the impact of population aging, as currently designed these systems will also fail to generate adequate replacement rates.  Meanwhile, rapid development and rapid demographic change are putting increasing pressure on alternative sources of retirement income, and especially the extended family. Voluntary Pensions in Emerging Markets: New Strategies for Meeting the Retirement Security Challenge argues that the success of emerging markets at ensuring retirement security will increasingly depend on their success at building robust voluntary pension systems.

Global Aging and the Outlook for Growth and Stability in the Developing World

Demographic trends have played a decisive role in precipitating many of the great upheavals of history. Global Aging and the Outlook for Growth and Stability in the Developing World argues that by the 2020s they may once again threaten widespread disruption. The issue brief, which is jointly published by the Global Aging Institute (GAI) and the Pacific Pension & Investment Institute (PPI), explores how demographic change will reshape the economic, social, and geopolitical environment over the next few decades. It focuses on the outlook for the developing world, where the impact of global aging is both more complicated and less well understood than in the developed world. While the “demographic transition” now under way in the developing world may ultimately push it toward greater prosperity, stability, and peace, the issue brief warns that the progress is unlikely to be linear. Indeed, from lingering youth bulges in sub-Saharan Africa and parts of the Greater Middle East to premature aging in China and population implosion in Russia, demographic trends may prove to be every bit as disruptive in this century as they were in the last. 

Meeting Hong Kong's Retirement Challenge

The traditional system of family-centered retirement provision is weakening in Hong Kong, yet adequate government and market substitutes have not yet taken its place.  The result is widespread retirement insecurity.  This issue brief, the first in a new series jointly published by the Global Aging Institute (GAI) and the Pacific Pension & Investment Institute (PPI), discusses the forces that are pushing pension reform to the top of the policy agenda in Hong Kong, evaluates the strengths and weaknesses of the Mandatory Provident Fund, Hong Kong’s state pension system, and explores strategies for improving the overall adequacy and sustainability of retirement provision. 

From Challenge to Opportunity:
Wave 2 of the East Asia Retirement Survey

When it comes to retirement, East Asia finds itself at a crossroads. The role of the family in retirement security is receding, but adequate government and market substitutes have not yet taken its place. How well are retirees in East Asia coping with the changes? How prepared are workers for their own future retirement? And what type of retirement system would people actually prefer, if given the choice? From Challenge to Opportunity: Wave 2 of the East Asia Retirement Survey answers these questions and offers new insights into how governments and businesses can help individuals and families across the region better prepare for retirement. The report is based on nationally representative surveys of workers and retirees in ten countries: China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

East Asia Retirement Survey:
Wave 2 Country Reports

Global Aging and Retirement Security in Emerging Markets:
Reassessing the Role of Funded Pensions

The developing world’s age waves will be arriving in societies that in many cases have not yet put in place the full social protections of a modern welfare state. This creates an opportunity, but also raises the stakes of retirement reform. On the one hand, today’s emerging markets, most of which are unburdened by large unfunded pension liabilities, have much greater flexibility to design retirement systems that are adapted to the new demographic realities. On the other hand, failure to rise to the challenge could result not just in fiscal stress and economic hardship, but also in a humanitarian aging crisis of immense proportions. Global Aging and Retirement Security in Emerging Markets: Reassessing the Role of Funded Pensions explores the challenge of ensuring the adequacy and sustainability of retirement systems in aging emerging markets, and in particular, the potential advantages of the funded pension model.

Lessons from Abroad for the U.S. Entitlement Debate

The unsustainable federal budget outlook will inevitably push entitlement reform to the forefront of the national policy debate. As America’s leaders consider reform options, they will have much to learn from the experience of other developed countries, several of which have recently enacted far-reaching overhauls of their state pension systems that greatly reduce the long-term fiscal burden of their aging populations. Lessons from Abroad for the U.S. Entitlement Debate places America’s aging challenge in international perspective, examines the most promising reform initiatives in nine other developed countries, and draws practical lessons for U.S. policymakers.

The Global Aging Preparedness Index, Second Edition

The second edition of The Global Aging Preparedness Index (or GAP Index), released in October 2013, thoroughly updates the first edition to reflect the latest demographic, economic, and policy developments since 2010. The overall design of the GAP Index, however, remains largely unchanged in order to ensure that the two editions are as comparable as possible.

U.S. Development Policy in an Aging World:
New Challenges and New Priorities for a New Demographic Era

The developing world is in the midst of a sweeping demographic transformation with profound implications for U.S. development policy. In the future, the challenge will no longer be helping countries overcome the obstacles to development posed by high birthrates and rapid population growth, but leveraging the opportunities created by falling birthrates and slowing population growth. U.S. Development Policy in an Aging World: New Challenges and New Priorities for a New Demographic Era discusses how emerging markets can best leverage their “demographic dividends” in order to boost income and wealth while they are still young and growing, as well as how they can prepare for the inevitable aging of their populations that looms just over the horizon. It also explores what the new demographic realities imply for the optimal shape of U.S. development policy in decades to come.

Balancing Tradition and Modernity:
The Future of Retirement in East Asia

As the world’s societies age, governments and businesses are trying to look ahead and anticipate the needs of tomorrow’s growing elderly populations. Nowhere is this more difficult to do than in emerging East Asia, where economic modernization, changing cultural norms, and rapidly aging populations are transforming retirement behavior and expectations. Balancing Tradition and Modernity: The Future of Retirement in East Asia explores the implications of rapid development and rapid aging for retirement policy and planning in the most economically important region of the emerging world. The report is based on nationally representative surveys of workers and retirees conducted in China, Hong Kong, Malaysia, Singapore, South Korea, and Taiwan.

Global Aging and the Future of Emerging Markets

The rich world may be leading the way into humanity’s graying future, but much of the developing world is not far behind. Global Aging and the Future of Emerging Markets assesses the potential impact of the “demographic transition” on economic growth and social and political stability in today’s emerging markets. The report stresses that as birthrates fall and life expectancy rises much of the emerging world is entering a period in which population trends will tend to lean with economic growth. But it also warns that the pace of the transition is highly uneven, that many countries are failing to leverage their favorable demographics, and that rapid development brings risks as well as opportunities. While there is room for optimism, the notion that the developing world is heading linearly toward a new era of greater peace and prosperity is deeply flawed.

China’s Long March to Retirement Reform:
The Graying of the Middle Kingdom Revisited

Latin America’s Aging Challenge:
Demographics and Retirement Policy in Brazil, Chile, and Mexico

When people think of Latin America, they usually picture youthful societies characterized by lofty birthrates, large families, and chronic labor surpluses. Yet by mid-century, several of the region’s largest economies may have older populations than the United States. Latin America’s Aging Challenge: Demographics and Retirement Policy in Brazil, Chile, and Mexico argues that Latin America’s success in meeting its aging challenge will depend as much on putting in place more effective development policies as on building more adequate and sustainable retirement systems. If Latin America fails on either front, the region could face widespread economic hardship and social instability—or even a “humanitarian aging crisis”—when its age waves begin to roll in.

The Graying of the Great Powers:
Demography and Geopolitics in the 21st Century

From the fall of the Roman and the Mayan empires to the colonization of the New World and the youth-driven revolutions of the twentieth century, demographic trends have played a decisive role in many of the great invasions, political upheavals, migrations, and environmental catastrophes of history. By the 2020s, an ominous new conjuncture of demographic trends may once again threaten widespread disruption. The Graying of the Great Powers: Demography and Geopolitics in the 21st Century explores how population aging and population decline will constrain the ability of the United States and its traditional developed-country allies to maintain national and global security over the next few decades. It also examines the security implications of demographic trends in the developing world, from “premature aging” in China to population implosion in Russia. While some political scientists argue that the forces of demography are pushing the world toward greater peace and stability, this study concludes that they pose growing geopolitical risks—and that the period of greatest danger lies just over the horizon.

The Aging of Korea:
Demographics and Retirement Policy in the Land of the Morning Calm

By 2050, there could be more Koreans turning ninety each year than being born. Quite simply, no other country at a similar stage of development faces an age wave as massive as Korea’s—or as fast approaching. Despite the breathtaking economic growth of recent decades, Korea in many ways remains a traditional society with a traditional understanding of social roles. Workers are expected to retire early from formal employment. The elderly are expected to live with and be supported by their extended families. Women who marry are expected to quit their jobs. Back in the 1960s, Korea set out to transform itself from an impoverished agrarian nation into a world-class economic power—and successfully harnessed its national will and national resources to the task. As The Aging of Korea: Demographics and Retirement Policy in the Land of the Morning Calm explains, confronting its coming age wave will require a transformation that is every bit as profound.

Long-Term Immigration Projection Methods:
Current Practice and How to Improve It

The size and composition of international migration flows will play an increasingly important role in determining the overall demographic and economic outlook for United States and other nations with aging populations. Yet the immigration projection methods employed by leading national and international agencies responsible for making population projections rely on ad-hoc assumptions that are based on little theory and virtually no definable methodology. Long-Term Immigration Projection Methods: Current Practice and How to Improve It assesses the current state of immigration projection practice; explores theoretical insights into and empirical research about what determines international migration flows; and discusses how these insights and research could be used to create a superior projection model. The proposed model is “driver-based,” meaning that immigration would be projected based on observed associations between migration behavior and other conditions, such as multinational trends in population, wages and living standards, trade and capital flows, age distribution, education, urbanization, and market orientation or “globalization.” 

Building Human Capital in an Aging Mexico

Since 1970 Mexico’s fertility rate has plunged from 6.5 to just 2.2, barely above the replacement level. Meanwhile life expectancy has leapt by fourteen years, from 63 to 77. Together, these two trends will soon lead to a dramatic aging of Mexico’s population. Building Human Capital in an Aging Mexico explores how Mexico’s demographic transformation will reshape its economy and society. The report discusses a wide range of policy responses to Mexico’s aging challenge, from labor market reform to pension reform, but focuses in particular on the imperative of making new and more effective investments in the nation’s human capital. Along the way, it identifies potential demographic and economic synergies between Mexico and the United States that could be leveraged for the benefit of both nations.