The Cost of Living Longer: Projections of the Effects of Prospective Mortality Improvement on Economic Support Ratios for Fourteen More Advanced Economies

Nick Parr, Macquarie University
Jackie Li, Curtin University
Leonie Tickle, Macquarie University

The aims of this paper are threefold; (1) to forecast mortality for a wide range of advanced economies from 2010-2050; (2) to project the effects of the forecast mortality patterns on the support ratio assuming continuation of current fertility, migration and labour force participation; and 3) to calculate changes to labour force participation which could offset these effects. The mortality forecasts are prepared using the Poisson Common Factor Model (Li 2013). The forecast gains in life expectancy are greatest in Japan, Australia and East-Central Europe, least in Netherlands, North America and Sweden, and correlate negatively with fertility and migration levels. The projected 2010-2050 reductions in support ratios vary widely between countries due to the coincidence of lower fertility and rapid mortality improvement. Partial recoveries in support ratios are projected for most East-Central and Southern European countries post-2050. Changes to workforce participation needed to compensate for mortality improvement vary widely between countries.