Part-Time Pensions and Part-Time Work in Sweden

Table 1: The share of the population in some countries who are 65 years old and over and 80 years old and over (%)
Source: U.S. Department of Commerce, Economics and Statistics Administration, and U.S. Census Bureau, An Aging World 2001, Washington, D.C., 2002.

There are two factors behind the development towards an ageing population. The first factor is that fertility is low, below the level leading to a non-declining population. New cohorts are smaller than earlier cohorts and the population pyramid is not a pyramid anymore. The other factor is that people are living longer. In the early decades of the 20th century, life expectancy increased primarily because child mortality and mortality among those of active age declined. Mortality in epidemic diseases was drastically reduced. During the most recent decades life expectancy has mainly increased due to the fact that those who reach retirement age live more years after reaching that age. This form of increase in life expectancy has a greater effect on the share of the population who are of old age than the earlier dominating forms of increase in life expectancy. The effect will be magnified when the baby boom cohorts from the 1940s reach retirement age. This is another reason for the present intense discussion on the effects of the ageing of the population.
As seen in Table 1, the share of those who are 80 years old and over is increasing strongly. This means that not only the pension costs but also the costs for old age care and health services will increase considerably.
The main factors behind the ageing of the population are the increase in life expectancy and low fertility. That we live longer is a very positive development. Fertility may be influenced to some extent by the family and education policy. But we should not expect any large effects and a rise in fertility will only have an effect on labour supply with a lag of about 20 years. In the first decades after an increase in the fertility rate the share of the population who are of active age will decline. The measures which may increase the number of hours worked in the economy do not influence the two main factors behind the increase of the old age share, but are targeted towards increased labour force participation among different demographic groups. This will be discussed in the next section of the paper.

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