Description:

Most nations are facing rapid aging, especially as baby boomers are retiring. Japan and many European nations went through a similar experience decades ago. Today, South Korea is following this trend at an alarming pace, as are many developed nations, including the US.

As birth rates are plummeting and survival rates increasing, modern aging leaves a clear footprint on the age composition of a country. The ratio of old people to young people measured by any standard is rapidly increasing. This trend is exacerbated by the on-going retirement of baby boomers. Since baby boomers represent a very significant chunk in the age profile of a country, retiring baby boomers exert a significant impact on both political and economic policy.

As baby boomers and other old people gain relatively stronger voice upon economic policy, the economic environment may become distorted in favor of baby boomers, and at the cost of millennials. For example, in countries dominated by baby boomers, pension deficits are more likely to be financed by income taxes, while property tax, gift tax and inheritance tax are generally not regarded as the legitimate source of financing social agenda.

To make things worse, since old people are the majority voice in an aging society, democracy may not bring an easy solution to the problem. In short, we are facing a difficult situation where those who have political hegemony may not find efficient and "generationally just" economic policy to their interest.

Sung-In Jun is a Professor of Economics at Hongik University and a visiting scholar at Northwestern Buffett Institute. His main research agenda includes reform in financial regulation and the study of Korean Chaebols.

The Northwestern Buffett Faculty & Fellows Lecture Series brings together an interdisciplinary audience to build awareness of global research on campus. This series promotes dialogue on scholarship and develops a deeper sense of community among Buffett Institute affiliates. Each meeting lasts one hour; lunch is provided.