Demographic Change in Asia:
The Implications of Evolving
Support Systems
Community 50+ Asia
Andrew Mason
East-West Center and
University of Hawaii at Manoa
Three Key Features of Asia
Demography: Asia is experiencing slower
population growth and rapid population aging.
Economic lifecycle: High consumption but low
labor income during old age.
Diverse systems for meeting the material needs
of the elderly.



Financial systems
Public programs
Familial support
Why are the three features
important?
Economic growth and standards of living
Government budgets
Intergenerational relationships
Regional distribution of wealth (and power)
Bottom Line
Basis for optimism: Population aging
means fewer workers, but more wealth.
Policy imperatives




Avoid excessive reliance on transfer programs
Improve financial systems
Promote education of consumers and
policymakers
Proceed without delay!
Research Background
International project based at the East-West
Center and UC – Berkeley
Research teams from 23 countries participating
including US, Japan, China, Korea, Taiwan,
Thailand, Philippines, Indonesia, and India.
Results are preliminary.
Core support from the National Institute on
Aging.
Details: www.ntaccounts.org
First Feature:
The Demography
Effective labor force (1950=100)
.
Population Decline: Labor Force China,
India, Japan, and the US, 1950-2050
700
600
500
400
Labor force decline
has begun in
Japan; on the
horizon in China.
India
China
300
US
200
Japan
100
0
1950
1975
2000
2025
2050
Population Aging: China, India,
Japan, and the US, 1950-2050
0.9
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
19
50
19
60
19
70
19
80
19
90
20
00
20
10
20
20
20
30
20
40
20
50
Pop 65+/Pop 20-64
0.8
China
India
Japan
USA
Cause of Population Aging:
US versus Japan in 2006
Life expectancy greater in Japan
 82 in Japan
Most important by far!

78 in US
Fertility is much lower in Japan


1.3 births per woman in Japan
2.1 births per woman in US
Immigration is much lower in Japan


Negligible in Japan
1 million per year in US
Low Fertility Common in Asia
India
Indonesia
Malaysia
Thailand
China
Singapore
Replacement fertility:
Below this birth rate
population cannot be
sustained.
Japan
Taiwan
S Korea
0
0.5
1
1.5
2
Births per woman
Source: Population Reference Bureau 2007.
2.5
3
3.5
The Demography: Summary
Rapid population aging is occurring or will
soon begin in many Asian countries.
Population decline is also likely.
Low fertility will exacerbate these trends.
Second Feature:
The Economic Lifecycle
Consumption and Labor Income, US, 2003
Consumption by the
elderly greatly exceeds
their labor income
60000
Steep rise in consumption
due to health care and longterm care.
Per Capita Value ($)
50000
40000
Consumption
30000
20000
Labor Income
10000
0
0
10
20
30
40
50
Age
Source: Lee et al., 2006.
www.ntaccounts.org.
60
70
80
90+
Gap between Consumption and Labor
Income at Older Ages, 13 Countries
LCD Elderly/Yl(30-49)
Average gap is larger in “old”
Japan,
12 US, and Uruguay than in
11 “young countries”.
10
9
CR
Tw
8
Th
Ch
7
SK
6
5 Ph In
4 Indo
3
2
0.1
0.15
0.2
0.25
US
Ur
Jp
Sw
But Sweden has a more
modest gaps.
0.3
0.35
0.4
Old-age Dependency Ratio: N(60+)/N(20-59)
0.45
0.5
Economic Lifecycle Summary
In all countries the per person gap
between consumption and labor income at
older ages is large.
Some tendency for the gap to be larger in
older countries. Implies that the economic
resources to older ages may increase
faster than the population in those groups.
Gap is not larger in some older countries.
Third Feature:
The Support System
(How do we fill the gap at
older ages?)
Older adults rely
on private
pensions,
housing,
personal saving,
etc.
Older adults rely
on adult children
often living
together.
Saving
Older adults rely
on public
pensions, health
care, and other
transfer
programs.
Familial
Transfers
Public
Transfers
Old-Age Support Systems
Saving
Asia (except
Japan)
Latin
America
Japan
and West
Familial
Transfers
Public
Transfers
Old-Age Support Systems
Saving
Taiwan: Decline
in family, increase
in public and
saving.
Familial
Transfers
Japan: Decline
in family and
saving; increase
in public.
Public
Transfers
Trend: Old-Age Support Systems
Three Scenarios for
Aging Societies
Possibility I
Rapid population aging
Large lifecycle gap for the elderly
Reliance on public support systems
Heavy burden on future generations
of taxpayers
Possibility II
Rapid population aging
Large lifecycle gap for the elderly
Reliance on familial support systems
Heavy burden on our adult children
Possibility III
Rapid population aging
Large lifecycle gap for the elderly
Reliance on saving
Increase in wealth and more rapid
economic growth
Actual Outcome Depends on:
Trends in demographic variables
Extent to which the gap between
consumption and labor income widens,
narrows, or remains the same
Shifts in the relative importance of familial
support, public support, and retirement
saving.
An Optimistic Scenario: 65% Saving Option
Assets Relative to Labor Income
14
Assets/labor income
12
10
India
US
China
Japan
8
6
4
2
0
1950
1975
2000
2025
2050
A Positive Outcome
If people save to support themselves in
retirement, population aging leads to



An increase in per capita wealth
An increase in wages due to the greater
investment
Higher standards of living.
Implications for Policy
Emphasize asset accumulation over public
and familial financial support systems.
But some major problems



How do we deal with rising costs of health
and long-term care?
How do we promote the development of
sound and reliable financial sectors in
countries where they do not yet exist?
How do we get people to save (and to do so
wisely)?
Implications for Policy
To what extent should immigration policy
be influenced by aging? Transfers from
legal immigrants to older Americans,
through Social Security, Medicare, and
Medicaid are substantial.
What steps should low fertility countries
take to encourage marriage and
childbearing?
Important Role for NGOs
Educate consumers
Encourage dialogue across
generations
Elevate public policy discourse
The National Transfer Accounts project is a collaborative effort of
East-West Center, Honolulu
and
Center for the Economics and
Demography of Aging,
University of California - Berkeley
Lee, Ronald, Co-Director
Mason, Andrew , Co-Director
Auerbach, Alan
Miller, Tim
Lee, Sang-Hyop
Donehower, Gretchen
Ebenstein, Avi
Wongkaren, Turro
Takayesu, Ann
Boe, Carl
Comelatto, Pablo
Sumida, Comfort
Schiff, Eric
Stojanovic, Diana
Langer, Ellen
Chawla, Amonthep
Pajaron, Marjorie Cinco
Japan
Key Institutions: Nihon University Population Research
Institute and the Statistics Bureau of Japan, Tokyo, Japan.
Ogawa, Naohiro, Country Leader
Matsukura, Rikiya
Maliki
Obayashi, Senichi
Kondo, Makoto
Fukui, Takehiro
Ihara, Hajime
Suzuki, Kosuke
Akasaka, Katsuya
Moriki, Yoshie
Makabe, Naomi
Ogawa, Maki
Australia
Key Institution: Australia National University
Jeromey Temple, Country Leader
Brazil
Turra, Cassio, Country Leader
Lanza Queiroz, Bernardo
Renteria, Elisenda Perez
Chile
Key Institution: United Nations Economic Commission for
Latin America and the Carribean, Santiago, Chile
Bravo, Jorge
Mauricio Holz
China
Key Institution: China Center for Economic
Research,
Beijing, China.
Ling, Li, Country Leader
Chen, Quilin
Jiang, Yu
Taiwan
Key Institution: The Institute of Economics,
Academia Sinica, Taipei, Taiwan.
Tung, An-Chi, Country Leader
Lai, Mun Sim (Nicole)
Liu, Paul K.C.
Andrew Mason
France
Wolff, Francois-Charles, Country Leader
Bommier, Antoine
Thailand
Key Institution: Economics Department, Thammasat University.
Phananiramai, Mathana, Country Leader
Chawla, Amonthep (Beet)
Inthornon, Suntichai
India
Key Institution: Institute for Social and Economic Change, Bangalore
Narayana, M.R., Country Leader
Ladusingh, L.
Mexico
Key Institution: Consejo Nacional de Población
Partida, Virgilio, Country Leader
Mejía-Guevara, Iván
Indonesia
Key Institution: Lembaga Demografi, University of Indonesia, Jakarta, Indonesia.
Maliki, Country Leader
Wiyono, Nur Hadi
Nazara, Suahasil
Chotib
Philippines
Key Institution: Philippine Institute for Development Studies.
Racelis, Rachel H., Country Leader
Salas, John Michael Ian S.
Pajaron, Marjorie Cinco
Sweden
Key Institution: Institute for Future Studies, Stockholm, Sweden.
Lindh, Thomas, Country Leader
Johansson, Mats
Forsell, Charlotte
Uruguay
Bucheli, Marisa, Country Leader
Furtado, Magdalena
Rodrigo Ceni
Cecilia Rodriguez
South Korea
An, Chong-Bum , Country Leader
Chun, Young-Jun
Lim, Byung-In
Kim, Cheol-Hee
Jeon, Seung-Hoon
Gim, Eul-Sik
Seok, Sang-Hun
Kim, Jae-Ho
Austria
Key Institution: Vienna Institute of Demography
Fuernkranz-Prskawetz, Alexia, Country Leader
Sambt, Joze
Costa Rica
Key Institution: CCP, Universidad de Costa Rica
Rosero-Bixby, Luis, Country Leader
Maria Paola Zuniga
Slovenia
Sambt, Joze, Country Leader
Hungary
Key Institution: TARKI Social Research Institute
Gal, Robert
Medgyesi, Marton
Finland
Key institutions: The Finnish Center for Pensions
And the Finnish Pension Alliance
Vanne, Reijo
Gröhn, Jukka
Vaittinen, Risto
United States
Key Institution: Center for the Economics and Demography of Aging
Lee, Ronald, Country Leader
Miller, Tim
Ebenstein, Avi
Boe, Carl
Comelatto, Pablo
Donehower, Gretchen
Schiff, Eric
Langer, Ellen
Kenya
Mwabu, Germano
Nigeria
Soyibo, Adedoyin
The End
Support:
National Institutes of Health
NIA, R01-AG025488
NIA, R37-AG025247