The Aging Population and the Competitiveness of Cities
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The Aging Population and the Competitiveness of Cities

Benefits to the Urban Economy

Peter Karl Kresl and Daniele Ietri

While much of the current literature on the economic consequences of an aging population focuses on the negative aspects, this enlightening book argues that seniors can bring significant benefits – such as vitality and competitiveness – to an urban economy.
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Chapter 3: The Consequences for National and Sub-national Governments

Peter Karl Kresl and Daniele Ietri


The impact of aging on government revenues and expenditures is a composite of several individual items, some of which will improve the net fiscal position of governments while others will make it worse. The situation is made more complex due to the different sharing of program responsibilities in each country between the national and sub-national level of government, and by the different roles played by private sector institutions in each country. First, we will specify the individual elements in the calculation of the impact; in the second and third sections, we will examine the organization of sub-national government levels in the EU and the US and how the aging of the population is anticipated to have impact on the fiscal burden; finally, we will examine the role that can be played by the private sector. THE GENERAL IMPACTS OF AGING ON NATIONAL GOVERNMENT FINANCES The life cycle of individuals suggests that in our early years we will cause a drain on social resources because while we make no contribution to output we make claims for health care and education. In our middle years we are productive and make few demands on social resources, except for things such as national defense, highways and so forth. For some individuals there is a need to make claims for unemployment compensation and for short-term and long-term health care. In our post-employment years until death we make claims, sooner or later, for retirement income, health care and long-term care. This life-cycle model will be discussed...

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