The Economic Effects of Population Ageing


Due to the low birth rate, the Finnish population is aging faster than expected. The small number of children appears positive for the national economy and public finances in the first twenty years, but it accumulates at the same time future shortages in labor force and tax revenues. The labor force and population will start to decline in the middle of the century without a significant increase in labor migration. The welfare state is not prepared for the demographic change and the resulting slowdown in economic growth, which will weaken the chances of maintaining the promised public services and the desired income distribution in the future. The position of future generations will deteriorate if the tax rate and indebtedness continue to rise. We have studied extension of careers from the beginning and end by shortening study periods and postponing the retirement age and streamlining the investment policy for pension assets. All these measures could strengthen public finances. In addition, we investigated whether the intergenerational income distribution can be balanced by linking pension funding to birth rates.

Publication info

Results of research
Macroeconomic effects of demographic change
Research group
Macroeconomy and public finances
Population projections, Ageing, Macroeconomy, Public finances, Research, Research activities
Publisher / series
Publications of the Government's analysis, assessment and research activities 2021:36.
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