Funding the future
The impact of population ageing on revenues across levels of government
Government revenues may be affected by economic growth and changes in demographics
over time. The effect of economic growth can be captured by long-run buoyancy – responsiveness
of government revenues to GDP growth – while the demographic effect can be captured
by changes in labour income, asset income and consumption patterns over the life cycle,
as well as population growth. This paper attempts to quantify the effect of population
ageing on OECD tax revenues across different levels of government, by estimating error
correction models of revenue buoyancies over the 1990 to 2018 period, by type of revenue,
country and level of government. Multiple scenarios are used for the projections to
2040, which are combined with scenarios for the evolution of revenue bases using newly
harmonized EU and UN National Transfer Accounts data as well as OECD Population Projections.
Available from August 30, 2022
In series:OECD Working Papers on Fiscal Federalismview more titles