Longer lives and fertility far below the replacement level of 2.1 births per woman are leading to rapid population aging in many countries. Many observers are concerned that aging will adversely affect public finances and standards of living. Analysis of newly available National Transfer Accounts data for 40 countries shows that fertility well above replacement would typically be most beneficial for government budgets. However, fertility near replacement would be most beneficial for standards of living when the analysis includes the effects of age structure on families as well as governments. And fertility below replacement would maximize per capita consumption when the cost of providing capital for a growing labor force is taken into account. While low fertility will indeed challenge government programs and very low fertility undermines living standards, we find that moderately low fertility and population decline favor the broader material standard of living
Significant reductions in mortality are reflected in strong increases in life expectancy particularly in industrialized countries. Previous analyses relate these improvements primarily to medical innovations and advances in health-related behaviors. Mostly ignored, however, is the question to what extent the gains in life expectancy are related to structural changes in the populations due to increasing education levels. We decompose changes of the total populations' life expectancy at age 30 in Italy, Denmark, and the USA, over the 20-year period between 1990 and 2010 into the effects of education-specific mortality changes ("M effect") and changes in the populations' educational structure ("P effect"). We use the "replacement decomposition technique" to further subdivide the M effect into the contributions by the individual education groups. While most of the increases in life expectancy are due to the effect of changing mortality, a large proportion of improvements in longevity can indeed be attributed to the changing structure of the population by level of education in all three countries. The estimated contribution of the P effect ranges from around 15% for men in the USA to approximately 40% for women in Denmark. This study demonstrates strong associations between education and overall population health, suggesting that education policies can also be seen as indirect health policies.
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