We use the National Transfer Accounts framework to evaluate Singapore’s demographic dividends and the issue of the fiscal sustainability given an ageing population. Singapore’s first demographic dividend was generated in the period 1967-2004 with an increasing proportion of people of working ages engaged in productive employment relative to those who consume more than they earn. This first dividend contributed to about a third of Singapore’s GDP per capita growth in the period between 1965 and 2000 (Bloom & Williamson, 1998, Ogawa et al., 2009).
This first dividend is now reversing, with growth in old-age population exceeding growth in the labour force, leading to lower economic growth assuming no change in output per worker, labour force participation and employment rates. There is a narrative, in Singapore as well as in many other mature societies worldwide, that centres around the impact of population ageing on fiscal sustainability. Are there societal adaptations, other demographic dividends that may be tapped to offset the economic effects of population ageing, and improve the sustainability of public and private finances?