Pensions in a shrinking economy

Abstract

An aging society with an absolutely or relatively declining labour force can - with constant capital intensity - experience a reduction in the national capital stock thereby in the short-term disengaging resources, which can be transferred to the elderly for consumption purposes. Hence, net savings are negative: dissavings of the pensioners exceed savings of the working-age population. An aging society can indeed survive by 'eating up part of its capital stock' for some time. © 2011 Macmillan Publishers Ltd.