Hello Pls help me out with my english essay : 1) Discuss the socio economic implications of an ageing population. 2) Why do some people look forward to becoming

1) What are the implications of an ageing population? An older population presents many challenges to labour markets, government tax, government spending and the wider economy.

One of the great achievements of the twentieth century is a dramatic rise in life expectancy. For example, life expectancy in the US has increased from 45 in 1902 to 75.7 in 2004 (link). Even in the past 50 years, life expectancy has risen in most western economies.A declining birth rate also means a smaller number of young people. This will save the government money because young people require education and pay little, if any, taxes. Though the net cost of retired people is greater than the net cost of young people under 18.

It depends on the health and mobility of an ageing population. If medical science helps people live longer, but with poor mobility, there will be less chance to work. If people live longer and can remain physically active for longer, the adverse impact will be less.

Immigration could be a potential way to defuse the impact of an ageing population because immigration is primarily from people of working age. However, immigration brings its own political challenges and has become increasingly unpopular, despite net migration creating a positive net fiscal effect.

Increasing the retirement age is one solution to an ageing population. But, the effect of a higher retirement age will not be felt equally. Those with private savings may be able to still retire early, those with low income paid jobs are more likely to have to keep working. Also, the impact of longer working life will be felt more by manual workers who will find it harder to keep working.

Population demographics have been shifting for the past few centuries. This is not the first time we have had shifts in the age profile of the population.

A big issue is whether spending commitments are funded or unfunded. Many western governments fund their pension plans through pay as you go, rather than saving national insurance contributions. This could lead to gaps in spending commitments.

Part of the problem is that there is currently a strong incentive for people to retire early. The effective marginal tax rate imposed on earnings resulting from delayed retirement has in many systems been in excess of 60 percent (link) These incentives have encouraged many to take early retirement. Also, there is often a rule prohibiting people working longer – even if they wanted to. If these incentives can be changed, we could increase the number of people working for longer and reduce the dependency burden.

Economic growth. A big factor in determining the impact of an ageing population is future rates of economic growth. There is a concern, western economies have entered a period of secular stagnation – falling growth rates. This decline in economic growth will increase the pressure on public finances from an ageing population. Strong economic growth, increases tax revenues and makes it easier to fund pension commitments. But, in recent years we have seen stagnant wages and a decline in real incomes of young people. This places stress on redistribution of income from the young to retired. The problem is that an ageing population is one reason put forward for secular stagnation in a country like Japan.

Inequality. Another problem with an ageing population is that it could exacerbate inequality. With increased reliance on private sector savings, there could be a division between those with a good private sector pension, and those who rely on a diminishing state pension. Also, inequality could be exacerbated by the state of the housing market, with homeowners in a much better position than those who have to continue to rent into their retirement.