Geoscience Reference
In-Depth Information
total inc ome
pension
wage
Fig. 11.5
Contributions to income over a lifetime (no change in population structure)
1.6
1. 4
1. 2
1. 0
0. 8
0. 6
0. 4
0. 2
0. 0
21
26
31
36
41
46
51
56
61
66
71
76
81
total(no aging)
total(aging)
wage(no aging)
wage(aging)
Fig. 11.6
Contributions to income over a lifetime (ageing population)
precautionary saving for the working age cohorts but they cannot afford to suffi-
ciently increase savings due to the fall in total income. As a result, consumption
under an ageing population drops significantly except for the oldest cohorts,
reflecting a decline in total income and strong precautionary saving motives.
Figure
11.7
shows the transitional path of Gross Regional Product (GRP). The
fall in aggregate savings accompanied by the smaller labor force eventually leads to
the fall in the GRP compared to the before-ageing population. However, in the
initial periods, the transition to an ageing population helps to increase the absolute
level of effective labor and capital stock because baby boomers are still at work
enjoying higher productivity and accumulating a larger amount of assets preparing
for ageing. Both the increases in labor and capital necessarily drive the regional
output above the level of GRP before the ageing population. However, in the
subsequent period, GRP starts to decrease up to 2040s, and then converges at a
level that is lower by approximately 9 % compared to the base year (2005). This
