technological change, has radically reduced the need for spatial proximity of companies and consumers and has reshaped the organization, management, and production of companies and industries. Trade and financial flows produce ever closer linkages across nations. In analyzing the consequences of population aging in the United States, one must consider this aging phenomenon in the broader context of a globalized economy. There are likely to be substantial spillover effects of international trends on our country, and global conditions will influence macroeconomic variables.

The goal of this study is to provide a factual foundation for the social and political debates that will intensify. These debates, centered on deficit reduction, will focus heavily on policies involving public entitlements such as Medicare and Social Security. This report will not address the details of entitlement programs, as this has been done at great length elsewhere, nor will it offer specific policy recommendations. Rather, the intent here is to understand the broader and more fundamental factors related to population aging, to clarify policy-relevant issues, and to suggest policy levers that could be useful in designing responses to population aging.

This study will also serve as a springboard for a follow-on project that will incorporate modeling and projections to develop new insights on the long-run macroeconomic effects of the aging U.S. population. Owing to funding and time constraints, the present study was unable to undertake all the analyses that the committee thought were important. For example, it would be useful to more fully explore the interplay between demographic and labor force factors when considering whether an increasing share of what workers produce will have to be diverted to people who are economically inactive. The next study will seek to better characterize the sensitivities of projections and the interactions between macroeconomic variables. It will delve more deeply into how the uncertainties associated with existing demographic forecasts—which are addressed in Chapter 3 of this report—complicate predictions of economic behavior and macroeconomic performance. Presenting the complexity of that interplay in the current report would have required a degree of detail that adds little to its main messages and might interfere with their clarity. The next study will focus in part on intergenerational trade-offs and will generate quantitative illustrations of specific policy choices. It will also identify the most important available policy levers to influence the adequacy of retirement income and, where possible, identify interactions and complementarities among these policy levers.


In the context of deep uncertainty about societal responses to shifting demographics, the U.S. Congress asked the National Academies to form

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