impairments will have major implications for health care costs, and Chapter 4 considers recent trends in functional status and their relationship to socioeconomic variables and to disability. Chapter 5 examines patterns of labor force participation and retirement, highlights some of the attitudes and institutional features that influence employment behavior, and assesses the macro-level implications of longer working lives. Chapter 6 explores the intersection of population aging, technological innovation, and productivity; discusses what is known about the impact of a changing population age distribution on overall economic productivity; and suggests several pathways from a shifting age distribution to greater productivity and income. Chapter 7 tackles the complex relationship between aging populations and long-run rates of return on investments. The discussion considers various ways in which population aging affects capital markets, and emphasizes the importance of a global perspective. Chapter 8 looks at patterns of saving and wealth in the United States, considers whether saving is likely to be sufficient for future needs, and discusses several approaches to enhancing retirement security.

Chapter 9 examines the impact of population aging on federal and state budgets, noting that the projected imbalances between revenues and expenditures are only partially explained by demographic change. The discussion outlines a strategy for analyzing the macroeconomic effects of a given policy trajectory. The strategy includes estimation of the inter- and intragenerational distribution of changes in resources and marginal tax rates under the policy, the timing of anticipated policy changes, and the possibility of alternative policy paths and how they could impact economic trajectories.

From the committee’s deliberations emerged four clusters of topics on which additional research is recommended. The committee hopes these ideas, which are presented in the final chapter, will foster research that can better inform the relationships among the key variables discussed in this report. It hopes as well that such research will translate into macroeconomic modeling that allows us to identify and quantify the potential impact of policy changes on the well-being of the nation and its people.



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