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, Nanyang Technological University
Leonie Tickle, Macquarie University

The aims of this paper are threefold; (1) to forecast mortality for a wide range of more developed countries from 2010-2050, (2) to project the effects of the forecast mortality patterns on economic support ratios assuming continuation of current fertility, migration and labour force participation, and 3) to calculate changes to labour force participation which would offset these effects. The mortality forecasts are prepared for fourteen countries using the Poisson Common Factor Model proposed by Li (2013). The mortality forecasts show that the projected gains in life expectancy are greatest in Japan, Australia and East-Central Europe, and are least in Netherlands, North America and Sweden. Preliminary results for the projections show that the support ratios are projected to fall most over the period to 2050 in Japan, East-Central and Southern Europe, and least in Sweden and Australia. However, except for Poland, some recovery i support ratios is projected for the East-Central and Southern European countries post 2050. The dependency of the estimated effects of mortality improvement on support ratios and the initial age structure and the assumed levels of fertility, migration and labour force participation is discussed.