Population Ageing and Public Expenditure Trends in Finland

16 Pages Posted: 8 Mar 2012

See all articles by Helvi Kinnunen

Helvi Kinnunen

Bank of Finland - Research

Marja Tuovinen

Ministry of Finance, Finland

Date Written: March 31, 2005


The impact of population ageing on public expenditure development in Finland is analysed by Kinnunen and Tuovinen. As in other countries, ageing will lead to an increase in expenditure on pensions and other welfare services. Other than the increase in spending due to the expected demographic developments, they observe that the risk of overrun in expenditure is mostly related to the production process in public services, given that the public sector in Finland is generally service-oriented. In order to contain the upward trend in costs, productivity developments in the public sector will have to be particularly relevant. The Authors note that if a positive productivity trend were to generate substantial cost containment, tax cuts could also be consistent with fiscal stability. However, this would imply a reversal of the negative productivity trend observed in recent years. Hence, it would be advisable that the adjustment of expenditure policy allows the government to face the possible negative growth and productivity scenarios.

Suggested Citation

Kinnunen, Helvi and Tuovinen, Marja, Population Ageing and Public Expenditure Trends in Finland (March 31, 2005). Available at SSRN: https://ssrn.com/abstract=2017671 or http://dx.doi.org/10.2139/ssrn.2017671

Helvi Kinnunen (Contact Author)

Bank of Finland - Research ( email )

P.O. Box 160
FIN-00101 Helsinki

Marja Tuovinen

Ministry of Finance, Finland ( email )

Snellmaninkatu 1 A
FIN-00023, 00170

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