Future changes in age and household patterns: Some implications for public finances

Rasmus Højbjerg Jacobsen and Svend E. Hougaard Jensen

International Journal of Forecasting, 2014, vol. 30, issue 4, 1110-1119

Abstract: Using stochastic forecasting techniques, this paper assesses the consequences for public finances of changes in age and household structures in Denmark over the period 2008–2037. Focusing on components of welfare provisions and tax payments with noticeable differences across age and household status, we show that, based on a point forecast, the fiscal impact of changes in household structures amounts to an annual negative effect of 0.5% of GDP, and the effect of changes in age structures is forecast to worsen the public budget by 3.7% of GDP per year. While being subject to a considerable amount of uncertainty, the prospect of such a dramatic weakening of public finances is likely to trigger demands for welfare reforms characterized by a more individualized system of public transfer and tax payments, in addition to the measures that have already been taken to address the fiscal effects of population ageing.

Keywords: Probability forecasting; Demographic forecasting; Evaluating forecasts; Register data; Public finances; Household composition (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfor:v:30:y:2014:i:4:p:1110-1119

DOI: 10.1016/j.ijforecast.2014.05.004

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