Crisis of ageing in less developed countries. A crisis for whom? Some conceptual and policy issues

The age structure in many developing countries is changing - the population is ageing. There is an increasing concern over the social and economic costs of caring for this ageing population. It is the capacity of state to finance the expected rising social expenditure that has come to dominate the debate on the economics of population ageing. In this context the elderly are considered primarily as consumers and 'dependent' on the working population. Such a view of the elderly, this paper argues following the Keynesian and post-Keynesian literature, is incorrect. Firstly, empirical evidence shows that the aged do not consume (relative to their income) more than the rest of the population. Second, the issue of -'dependency' of the aged should be put in the broader context of the dependency of the unemployed and under-employed in a market economy. Third, focus of the debate should move away from consumption and towards production. Finally, since the old make claims on the national output on the basis of their accumulated assets, savings and pensions the distributional issues (in relation to assets as well as incomes) have be an integral part of any pension system in order to alleviate poverty among the elderly.