Population Aging and the Future of the Welfare State: The Example of Sweden

Abstract

Sweden was the world leader in population aging for a good portion of the twentieth century. during that century, the share of the elderly doubled in Sweden, with 18 percent aged 65 years and older in year 2000. while no longer at the forefront of population aging, the country’s share of elderly is still very high and is estimated to increase to 26 percent by 2050. the question is whether the next step toward population aging will continue as smoothly as the first step, when the increase in the share of elderly was paralleled by an expansion of the welfare state and increasing living standards for all age groups. will it be possible to maintain and improve living standards in all age groups, and will the various welfare systems be able to handle future population aging? already in the 1990s, the pension system underwent a change to make it more robust. today, the organization and funding of elderly support and health care are major concerns as the share of elderly increases. Can Sweden simply increase taxes or must there be a substantial long-term increase in labor productivity? will immigration or an increase in fertility be the answer or must the working life be extended? while this chapter examines the challenge of population aging in the years to come, it starts with an overview of how Sweden got to this point to see what we can learn from history.