EPCI (Economie politique du changement institutionnel) Seminar

Du 23/10/2020 de 11:00 à 12:30

TIM VLANDAS (Oxford Institute of Social Policy)

The political effects of ageing on the economy - ZOOM : https://zoom.univ-paris1.fr/j/97180134474?pwd=L1RVd2RSMXhDWXVZVGtmVzhKQTdCQT09

This article investigates the economic consequences of long term changes in the composition of the electorate. It focuses on the effects of ageing on the economy that operate through the growing political influence of the elderly on public policies. Since the elderly may have different policy preferences, their growing numbers and political power increasingly shape the policies and priorities that electorally responsive governments choose to pursue, with important effects on economic performance. Most research in economics, political science, social policy, sociology and population studies that either theorises the direct economic impact of ageing on the economy or the direct political impact of ageing on public policies. By contrast, I explore a third possibility, namely that the growing political power of the elderly may indirectly affect the economy. Specifically, I argue that ageing leads to lower economic growth both because the elderly direct resources in less efficient ‘consumption’ policies - instead of ‘social investment’ policies (crowding out mechanism), and because they do not penalise governments for poor economic performance as much as economically active electorate (‘unaccountability’ mechanism). To substantiate these claims, I provide evidence for the different policy preferences of the elderly, the ways parties adjust their party manifestos when faced with ageing electorates, and how the elderly penalise governments for economic mismanagement differently from the rest of the electorate. I then show that the share of the elderly is associated with more spending on pensions and health care, but less on childcare, family and labour market policies. As a result, ageing is negatively correlated with economic growth in advanced economies since the 1960s. Thus, ageing may lead to economic decline in democratic advanced capitalist countries.