A panel analysis of the joint effects of demographic and political structures on public savings and expenditures

Wong, Shijie. (2008). A panel analysis of the joint effects of demographic and political structures on public savings and expenditures Honours Thesis, School of Economics, The University of Queensland.

       
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Author Wong, Shijie.
Thesis Title A panel analysis of the joint effects of demographic and political structures on public savings and expenditures
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2008
Thesis type Honours Thesis
Total pages 103
Language eng
Subjects 14 Economics
Formatted abstract The demographic structure of the world will undergo profound changes in the corning years. Population ageing is a demographic challenge that the developed world will have to confront in the near future. Lower labour tax revenue and higher public expenditure brought about by ageing is expected to lower public savings. At the same time, population ageing is expected to have a political effect in that, as the size of the so called "grey voters" grows, so would be their political influence, potentially making any form of aged-related public expenditure reform difficult. However, the political influence of the elderly also depends on the type of political environment they are in. Democracy is more likely to be able to provide the platform for the elderly to exercise their political influence. However, legislatively strong majority governments might be able to resist the greater politically influence of the grey and keep public expenditure manageable. Using a large panel dataset of over 100 countries from 1980-2003, this thesis has attempted to examine public savings and expenditures through the lenses of both political and demographic structures. In particular, the thesis investigates if there are any differences in the ways in which autocratic governments, majority democratic governments and non-majority democratic governments respond to changes in the demographic structure. It was found that besides public housing and community amenities expenditure, majority and non-majority governments had almost no differences in their responses to demographic change. There is weak evidence that autocracies have higher autonomous public expenditure but democracies have a larger marginal spending per capita when dependency ratios rise. However, apart from the weak piece of evidence on offer and modest differences in public health and public housing and community amenities expenditure, ageing had an almost negligible impact on public expenditure whether the political regime was democratic or autocratic. The data suggests that per capita public expenditure is usually either kept constant or even cut back by governments when faced with an increase in aged dependency. If the issue was one of the fiscally sustainability of ageing, the findings suggest it is possible that governments are likely to be able to balance their books. There is also evidence that ageing has a negative impact on public savings and therefore, perhaps reform of the public expenditure and taxation systems today can help build up public savings before the advent of ageing.

 
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Created: Tue, 30 Nov 2010, 10:10:05 EST by Muhammad Noman Ali on behalf of The University of Queensland Library