Arguably, in every economy in the world, as the population grows older it comes with tremendous challenges. In this case, the responsible stakeholders need to look for ways to address the problems that arise. One of the problem that is associated with a population that grows older is the issue of social expenditure. The government has to implement ways to address the social expenditure problems if the population grows older. The responsible stakeholders have various options to focus on, which include influencing the taxes, immigration, as well as benefits. Each of the strategies used to address the issue of social expenditure comes with various consequences, which must be predetermined to avoid further creation of problems.
An aging population increases the level of dependency as well as increasing the social expenditure of a nation. Studies show that has the population grows older it puts much pressure on the government to increase the social welfare expenditure in order to satisfy the increasing dependent population. The solution to the problem is mostly focused on ensuring that there is an increase of work force in the near future (Lindert 12). One of the preferred solution that will address the social expenditure in a population that grows older is through immigration. Immigration entails the diffuse of the younger generation into the country. Therefore, the younger generation will be a good source of replacement to the older workforce. In this case, the revenue on tax will increase since the new workforce will be taxed. It is worth noting that, the older workforce is taxed less since they have retired. In addition, the immigration will increase the number of individuals to be dependent on. Another crucial way to address the issue is increasing the rate of tax so as to cover the social expenditure.
The problem of social expenditure must be addressed in an aging population. A population that grows older means that the rate of dependence will increase and the tax revenue will reduce, yet at the same time the social expenditure increases (Lindert 27). The government and responsible stakeholders must address the issue. One of the ways to address is to make immigration policies flexible and favorable, and to increase tax. Moreover, long term policies must be implemented to ensure that the young generation increases.
Work cited
Lindert, Peter H. Growing Public: Social Spending and Economic Growth Since the Eighteenth Century. Cambridge [u.a.: Cambridge Univ. Press, 2004. Print.
