Diverting The Old Age Crisis: International Projections of Living Standards
Dean Baker
Center for Economic and Policy Research
February 16, 2001
Table 1
Trends in Productivity Growth
|
|
OECD GDP Per Worker, 1979-96 |
OECD GDP Per Hour, 1979-96 |
Conference Board GDP Per Hour, 1973-95 |
Cumulative Productivity Growth, 2030 1995=100 |
|
Annual
Percent Change |
|
|
|
|
|
Australia |
1.2 |
1.3 |
1.4 |
162.7 |
|
Austria |
1.8 |
|
2.2 |
214.2 |
|
Belgium |
1.8 |
|
2.6 |
245.6 |
|
Canada |
|
|
1.4 |
162.7 |
|
Denmark |
1.7 |
|
1.7 |
180.4 |
|
Finland |
2.6 |
2.8 |
2.3 |
221.6 |
|
France |
1.8 |
2.4 |
2.5 |
237.3 |
|
Germany |
1.9 |
2.6 |
2.6 |
245.6 |
|
Ireland |
3.5 |
|
3.7 |
356.7 |
|
Italy |
2 |
|
2.4 |
229.3 |
|
Japan |
2.1 |
2.8 |
2.7 |
254.1 |
|
Netherlands |
1 |
|
2.1 |
207 |
|
New Zealand |
1.3 |
|
|
157.2 |
|
Norway |
2.3 |
2.8 |
2.9 |
272 |
|
Portugal |
2 |
|
1.3 |
157.2 |
|
Spain |
2.4 |
3 |
2.9 |
272 |
|
Sweden |
1.8 |
1.4 |
1.4 |
162.7 |
|
United Kingdom |
1.8 |
2.1 |
2.1 |
207 |
|
United States |
0.9 |
0.8 |
1 |
157.2 |
|
Average |
|
|
|
215.9 |
Notes: Cumulative
productivity numbers use the Conference Board data, except in the case of New
Zealand. The U.S. productivity projection is taken from the 1999 Social
Security Trustees Report.
Source: Schmitt and
Mishel (1998) analysis of OECD and Conference Board data.
Table 2
Productivity Levels
|
|
BLS GDP Per Worker, 1996 |
BLS GDP Per Hour, 1996 |
Conference Board GDP Per Hour, 1995 |
|
Australia |
NA |
NA |
76 |
|
Austria |
74.3 |
NA |
83 |
|
Belgium |
75.9 |
NA |
97 |
|
Canada |
76.2 |
NA |
85 |
|
Denmark |
77.9 |
NA |
74 |
|
Finland |
NA |
NA |
74 |
|
France |
71.6 |
100.4 |
102 |
|
Germany (west) |
80.2 |
106.8 |
101 |
|
Ireland |
NA |
NA |
84 |
|
Italy |
70.3 |
NA |
90 |
|
Japan |
81.0 |
70.9 |
68 |
|
Netherlands |
72.6 |
NA |
98 |
|
New Zealand |
NA |
NA |
NA |
|
Norway |
84.7 |
107.6 |
88 |
|
Portugal |
NA |
NA |
38 |
|
Spain |
NA |
NA |
70 |
|
Sweden |
67.1 |
82.9 |
79 |
|
United Kingdom |
65.1 |
NA |
84 |
|
United States |
100.0 |
100 |
100 |
Source: Conference Board
1998 and Bureau of Labor Statistics 1999.
Table 3
2030 GDP Per Worker Hour
|
|
OECD Growth Rate |
Conference Board Growth Rate |
|
U.S.-1995 = 100 |
|
|
|
Australia |
119.4 |
100.4 |
|
Austria |
184.0 |
139.8 |
|
Belgium |
194.0 |
200.8 |
|
Canada |
120.4 |
108.5 |
|
Denmark |
153.2 |
148 |
|
Finland |
255.2 |
194.5 |
|
France |
218.5 |
184 |
|
Germany (west) |
148.1 |
314.7 |
|
Ireland |
320.5 |
529.3 |
|
Italy |
186.3 |
236.6 |
|
Japan |
145.6 |
184.9 |
|
Netherlands |
170.8 |
159.4 |
|
New Zealand |
NA |
NA |
|
Norway |
164.3 |
223.6 |
|
Portugal |
87.2 |
45.2 |
|
Spain |
184.0 |
249.7 |
|
Sweden |
158.0 |
115.9 |
|
United Kingdom |
156.8 |
156.8 |
|
United States |
157.2 |
157.2 |
Source: Conference Board
1998, Bureau of Labor Statistics 1999, and author's calculations.
Table 4
Public Pension Spending as a Share
of GDP
|
|
1990 Share (Includes
public employees) |
Public Employee Share of Pension Spending |
SS Type Pension |
Increase by 2030 |
|
Australia |
3.9 |
19.3 |
3.15 |
2.66 |
|
Austria |
14.8 |
29.9 |
10.37 |
7.34 |
|
Belgium |
11 |
30.6 |
7.63 |
4.24 |
|
Canada |
4.2 |
5.8 |
3.96 |
3.70 |
|
Denmark |
9.9 |
11.8 |
8.73 |
5.14 |
|
Finland |
10.3 |
19.3 |
8.31 |
5.65 |
|
France |
11.8 |
20.5 |
9.38 |
5.56 |
|
Germany |
10.8 |
17.7 |
8.89 |
6.57 |
|
Ireland |
6.1 |
19.3 |
4.92 |
5.60 |
|
Italy |
14.4 |
15.6 |
12.15 |
9.03 |
|
Japan |
5 |
2.5 |
4.88 |
4.42 |
|
Netherlands |
9.8 |
19.3 |
7.91 |
6.93 |
|
New Zealand |
7.5 |
19.3 |
6.05 |
4.62 |
|
Norway |
10.1 |
19.3 |
8.15 |
3.23 |
|
Portugal |
7.7 |
19.3 |
6.21 |
4.04 |
|
Spain |
7.5 |
19.3 |
6.05 |
4.06 |
|
Sweden |
11.6 |
19.3 |
9.36 |
4.54 |
|
United Kingdom |
9.5 |
19.3 |
7.67 |
3.24 |
|
United States |
6.5 |
25.9 |
4.82 |
3.37 |
|
U.S. With Medicare |
|
|
6.93 |
4.84 |
Source: World Bank 1994,
table A-5 and author's calculations.
Table 5
Projections of Before and After Tax
Wages for 2030
|
|
Before Tax |
After-tax |
|
1995 = 100 |
|
|
|
Australia |
162.7 |
154.5 |
|
Austria |
214.2 |
175.5 |
|
Belgium |
245.6 |
220.0 |
|
Canada |
162.7 |
150.0 |
|
Denmark |
180.4 |
155.7 |
|
Finland |
221.6 |
188.4 |
|
France |
237.3 |
202.5 |
|
Germany |
245.6 |
207.4 |
|
Ireland |
356.7 |
318.7 |
|
Italy |
229.3 |
178.4 |
|
Japan |
254.1 |
233.0 |
|
Netherlands |
207 |
172.8 |
|
New Zealand |
157.2 |
140.9 |
|
Norway |
272 |
252.7 |
|
Portugal |
157.2 |
143.0 |
|
Spain |
272 |
248.8 |
|
Sweden |
162.7 |
138.9 |
|
United Kingdom |
207 |
193.5 |
|
United States |
157.2 |
147.8 |
Source: Author's
Calculations.
Table 6
Growth Projections for After-Tax
After-Health Care Wages
|
|
Growth in Health Care Spending as a Share of
GDP |
Growth as a Share of After-Tax, After-Health
Care Wages |
After-tax, After-Health Care Wages, 1995 = 100 |
After-tax Wages, 1995 = 100 |
Before-tax Wages, 1995=100 |
|
Australia |
3.5 |
7.1 |
143.5 |
154.5 |
162.7 |
|
Austria |
3.6 |
11.1 |
156.1 |
175.5 |
214.2 |
|
Belgium |
4.4 |
12.0 |
193.6 |
220.0 |
245.6 |
|
Canada |
3.5 |
8.3 |
137.5 |
150.0 |
162.7 |
|
Denmark |
1.7 |
5.4 |
147.3 |
155.7 |
180.4 |
|
Finland |
2.0 |
6.4 |
176.4 |
188.4 |
221.6 |
|
France |
5.4 |
17.2 |
167.7 |
202.5 |
237.3 |
|
Germany |
4.4 |
12.5 |
181.5 |
207.4 |
245.6 |
|
Ireland |
0.7 |
1.6 |
313.7 |
318.7 |
356.7 |
|
Italy |
2.5 |
7.9 |
164.4 |
178.4 |
229.3 |
|
Japan |
4.1 |
8.4 |
213.5 |
233.0 |
254.1 |
|
Netherlands |
2.6 |
7.6 |
159.6 |
172.8 |
207 |
|
New Zealand |
3.0 |
7.7 |
130.0 |
140.9 |
157.2 |
|
Norway |
2.8 |
6.6 |
236.0 |
252.7 |
272 |
|
Portugal |
6.2 |
16.2 |
119.8 |
143.0 |
157.2 |
|
Spain |
4.5 |
10.5 |
222.8 |
248.8 |
272 |
|
Sweden |
1.9 |
7.2 |
128.9 |
138.9 |
162.7 |
|
United Kingdom |
3.0 |
6.6 |
180.7 |
193.5 |
207 |
|
United States |
9.4 |
20.5 |
127.3 |
147.8 |
157.2 |
Source: OECD 1998 and
author's calculations.
Table 7
Growth Projections for After-Tax
After-Health Care Wages
With Inequality
|
|
Percent Increase in Inequality 1973-95 |
Implied Reduction in Rate of Annual Wage
Growth, (percentage points) |
Before-tax Wages (no inequality) 1995=100 |
Before-tax
Wages (with inequality) 1995=100 |
After-tax Wages (with inequality) 1995=100 |
After-tax, After-Health Care Wages (with inequality) 1995=100 |
|
Australia |
5.98 |
0.40 |
162.7 |
147.2 |
139.8 |
129.8 |
|
Austria |
0.78 |
0.05 |
214.2 |
207 |
169.6 |
150.8 |
|
Belgium |
-3.3 |
-0.22 |
245.6 |
262.9 |
235.4 |
207.2 |
|
Canada |
3.44 |
0.23 |
162.7 |
174.3 |
160.6 |
147.3 |
|
Denmark |
5.26 |
0.35 |
180.4 |
157.2 |
135.7 |
128.3 |
|
Finland |
3.46 |
0.23 |
221.6 |
207 |
176.0 |
164.8 |
|
France |
2.75 |
0.19 |
237.3 |
221.6 |
189.1 |
156.6 |
|
Germany |
-1.96 |
-0.13 |
245.6 |
254.1 |
214.5 |
187.8 |
|
Ireland |
NA |
NA |
356.7 |
NA |
NA |
NA |
|
Italy |
10.67 |
0.72 |
229.3 |
180.4 |
140.4 |
129.3 |
|
Japan |
5.45 |
0.37 |
254.1 |
221.6 |
203.2 |
186.2 |
|
Netherlands |
4.39 |
0.30 |
207 |
186.7 |
155.8 |
143.9 |
|
New Zealand |
5.65 |
0.38 |
157.2 |
136.8 |
122.6 |
113.1 |
|
Norway |
2.99 |
0.20 |
272 |
254.1 |
236.1 |
220.5 |
|
Portugal |
30.84 |
2.08 |
157.2 |
75.5 |
68.7 |
57.6 |
|
Spain |
NA |
NA |
272 |
NA |
NA |
NA |
|
Sweden |
1.57 |
0.11 |
162.7 |
157.2 |
134.2 |
124.6 |
|
United Kingdom |
13.33 |
0.90 |
207 |
151.8 |
141.9 |
132.5 |
|
United States |
11.42 |
0.77 |
157.2 |
119.1 |
111.9 |
96.4 |
Source: Author's
Calculations.
Table 8
Comparative Impacts on Living
Standards of Median Worker
|
|
Differences in Productivity Growth |
Effect of Changing Inequality |
Effect of Higher Taxes |
Effect of Increased Health Care Costs |
|
Percent Change |
|
|
|
|
|
Australia |
-45.9 |
-13.5 |
-5.0 |
-7.1 |
|
Austria |
-1.5 |
-0.8 |
-18.1 |
-11.1 |
|
Belgium |
25.6 |
6.2 |
-10.4 |
-12.0 |
|
Canada |
-45.9 |
-7.4 |
-7.8 |
-8.3 |
|
Denmark |
-30.6 |
-10.5 |
-13.7 |
-5.4 |
|
Finland |
4.9 |
-7.4 |
-15.0 |
-6.4 |
|
France |
18.5 |
-7.4 |
-14.7 |
-17.2 |
|
Germany |
25.6 |
6.2 |
-15.6 |
-12.5 |
|
Ireland |
121.5 |
NA |
-11.7 |
-1.6 |
|
Italy |
11.6 |
-22.0 |
-22.2 |
-7.9 |
|
Japan |
33.0 |
-10.5 |
-8.3 |
-8.4 |
|
Netherlands |
-7.7 |
-10.5 |
-16.5 |
-7.6 |
|
New Zealand |
-50.6 |
-13.5 |
-10.4 |
-7.7 |
|
Norway |
48.4 |
-7.4 |
-7.1 |
-6.6 |
|
Portugal |
-50.6 |
-52.0 |
-9.0 |
-16.2 |
|
Spain |
48.4 |
NA |
-8.5 |
-11.5 |
|
Sweden |
-45.9 |
-4.1 |
-14.6 |
-7.2 |
|
United Kingdom |
-7.7 |
-27.2 |
-6.5 |
-6.6 |
|
United States |
-50.6 |
-22.0 |
-6.0 |
-13.8 |
|
|
|
|
|
|
|
Average |
42.8 |
16.3 |
11.6 |
9.2 |
Source: Author's
Calculations.
Table 9
Comparative Impacts on Living
Standards of Median Worker
in the United States
in 1999 Dollars
|
Median Wage, 1995 |
Median Wage, 2030 |
Adjusted for Productivity Differential |
Adjusted for Trend in Wage Inequality |
Adjusted for Tax Increases Due to Aging |
Adjusted for Increasing Medical Costs |
|
|
|
|
|
|
|
|
$15,741 |
$33,985 |
$24,753 |
$19,307 |
$18,149 |
$15,645 |
|
|
|
|
|
|
|
|
Lost After-Tax After Health Care
Income Due to: |
|||||
|
|
|
Slower Productivity Growth |
Increasing Wage Inequality |
Tax Increases Due to Aging |
Increasing Medical Costs |
|
|
|
|
|
|
|
|
|
|
$9,232 |
$5,446 |
$1,158 |
$2,505 |
Source: Author's
Calculations.