Aging and Social Expenditure in the Major Industrial Countries, 1980-2025

Abstract

In early 1984, several members of the Fund's Executive Board proposed that the Fiscal Affairs Department of the Fund conduct a comparative study of trends in government social expenditures, with particular attention to the implications of demographic trends in the industrial countries. A number of issues were of particular interest. What was likely to be the impact of the aging of the populations of the industrial countries on their outlays for social expenditures? Would diminished outlays for education offset increased outlays for pensions and medical care and what would be the impact on the share of social outlays in total output? What was the likely time pattern of evolution of social expenditures and would this be a significant factor to consider in the formulation of fiscal policy in the present? At the same time, the Organization for Economic Cooperation and Development (OECD) was in the process of completing a report that examined the factors underlying the evolution of social expenditures since 1960 in the OECD countries, with projections on the likely growth of social expenditure through 1990. The Fund study can be viewed as a complement to the OECD report, as it evaluates the impact of current demographic trends over the longer time frame during which the demographic structure will most demonstrably change. The focus is limited to the seven major industrial countries.