Edited by Donghyun Park, Sang-Hyop Lee and Andrew Mason
Complex systems of institutions and economic mechanisms make the periods of dependency in the economic lifecycle possible. An understanding of the lifecycle and of reallocation systems is fundamental to understanding the support system in an economy and the consequences of changes in population age structure. First, countries vary greatly in per capita economic lifecycles. Second, aggregate profiles vary greatly as well because population age structures differ. Third, countries vary greatly in the systems they employ to fund the lifecycle deficit, that is, their reallocation systems. Our objective is to describe the support systems in Asia in detail and to highlight the importance of those support systems for economic growth, fiscal sustainability, and other policy issues. The importance of support systems in Asia will increase substantially in the coming years because population aging is expected to be very rapid. Since the elderly will live longer and will be healthier, attitudes and policies about working life and retirement will and must change. Just working longer will not be sufficient. The current low reliance on public transfers will allow Asian economies to develop sustainable systems less encumbered by obligations to current and future generations of elderly (Mason and Lee, 2011). Keeping publicly funded healthcare for the elderly at a reasonable level will be crucial to developing sustainable systems. The impacts of changing support systems on other means of support will be significant. Relying heavily on public transfers may reduce reliance on labor income and reduce saving, but if public transfers are maintained at low levels and labor income and familial transfers play a limited role in the future, Asia’s elderly will have to rely on accumulating assets. This will help to create capital-intensive economies that can maintain standards of living as other support systems grow slowly or decline.
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