The Political Economy of Population Control and Retirement Security in China, India and the Philippines
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About This Book
*Philippine Economic Review*, Vol 31, No 2 (1990), pp 174-191.
**Abstract**
This study was conducted to estimate the costs and benefits of population control programs to retirement security of elderly populations in three developing countries, China, India and the Philippines. The old-age dependency ratio, based on each country’s population aged 65 and above divided by the population aged 15 to 64, was used as key indicator of population aging in this study. We assume the tax rate for retirement pensions to be proportional to this ratio, ceteris paribus. Stochastic modeling enabled us to estimate the probability of retirement security of the elderly within a forecast to predict what conditions might be like under different funding situations for retiree income and insurance. Nonetheless, we acknowledge that the random variables in this study are constrained by historical data, such as past market returns. We find that the pension problem will be less severe due to higher fertility in countries like the Philippines and India, and because of projections that their respective populations will remain younger than China’s. We suggest that the greater challenge lies with health care costs, particularly for any socialized health care system for the elderly. As the population ages, and spending per elderly citizen rises, including as a result of advances in medical science and technology, government spending on health care will likely soar and bear heavily on the younger, working-age population cohorts (e.g., significantly heavier tax burden). Thus, any population control or family planning program needs to be carefully evaluated in terms of its corresponding impact on retirement security.
JEL classification: H55, I13, J14, J26
**Keywords**
elderly, health care, insurance, pension, population, stochastic model, tax rate
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**Abstract**
This study was conducted to estimate the costs and benefits of population control programs to retirement security of elderly populations in three developing countries, China, India and the Philippines. The old-age dependency ratio, based on each country’s population aged 65 and above divided by the population aged 15 to 64, was used as key indicator of population aging in this study. We assume the tax rate for retirement pensions to be proportional to this ratio, ceteris paribus. Stochastic modeling enabled us to estimate the probability of retirement security of the elderly within a forecast to predict what conditions might be like under different funding situations for retiree income and insurance. Nonetheless, we acknowledge that the random variables in this study are constrained by historical data, such as past market returns. We find that the pension problem will be less severe due to higher fertility in countries like the Philippines and India, and because of projections that their respective populations will remain younger than China’s. We suggest that the greater challenge lies with health care costs, particularly for any socialized health care system for the elderly. As the population ages, and spending per elderly citizen rises, including as a result of advances in medical science and technology, government spending on health care will likely soar and bear heavily on the younger, working-age population cohorts (e.g., significantly heavier tax burden). Thus, any population control or family planning program needs to be carefully evaluated in terms of its corresponding impact on retirement security.
JEL classification: H55, I13, J14, J26
**Keywords**
elderly, health care, insurance, pension, population, stochastic model, tax rate
**Refbacks**
There are currently no refbacks.
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