Ageing and Fiscal Challenges across Levels of Government
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Populations in OECD and emerging economies are ageing rapidly, which will have significant macroeconomic impacts, including on public expenditures and tax revenues. The rules and practices that govern fiscal relations among different levels of government, such as their responsibilities for taxation, spending and debt management, have a bearing on economic efficiency and ultimately growth. The consequences of population ageing at subnational government levels are especially intense. Many local governments are vulnerable to the ageing of their populations from a fiscal perspective. The economic and fiscal challenges of an ageing population go beyond intergovernmental boundaries, and they require complex intergovernmental policy responses. This volume brings together cross-country studies of fiscal policy, demographics and spatial productivity, as well as country studies of Brazil, Canada, China and Germany.
Ageing and productivity growth in OECD regions: Combatting the economic impact of ageing through productivity growth?
OECD countries and their regions are ageing fast. In principle, the negative impact of ageing on the growth of per capita gross domestic product (GDP) could be offset by increases in productivity. However, for many regions, the actual growth rates recorded have been lower than productivity growth required to maintain per capita GDP levels in recent years. One reason for this is that ageing also has a direct negative impact on productivity growth, with the effect being concentrated in urban areas. Part of the explanation is that cities specialise in sectors such as tradable services, where the content of tasks makes it difficult to automate the production process, and where business dynamism – negatively affected by demographic change – is a key driver of productivity growth. Finally, ageing seems to be associated with a redistribution of revenues away from workers, towards capital and firm owners.
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