Fiscal Effects of Population Ageing in Colombia

Fiscal Effects of Population Ageing in Colombia | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Fiscal Effects of Population Ageing in Colombia Gerardo Reyes-Tagle, Jorge Munoz-Ayala This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9466308/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 4 You are reading this latest preprint version Abstract Among the most densely populated countries in Latin America and the Caribbean, Colombia is undergoing the fastest demographic transition. In this paper, we present a methodology to estimate the fiscal effects of this transition in the short, medium, and long term. To that end, we project public spending associated with demographic change through 2070. Our findings highlight the new pension spending and social security health spending that an increasingly aging population will require, while fiscal space is created by a relative decline in education spending as a result of a smaller flow of young people attending the education system. In contrast, on the revenue side, we estimate the response of VAT revenue to changes in the population distribution. Our findings suggest that VAT revenue exhibits a concave pattern across the life cycle, meaning that it responds inelastically in the tails of the population distribution (young and older adult populations) and elastically in the working-age population, and this latter group is the one that will contract the most as demographic change deepens over time. Regarding to revenue of income and complementary taxes, we expect this to be depleted as well due to a slower pace of economic growth caused by a gradual decline in the labor force. The combined effect on public finances will result in a structural fiscal imbalance, which will drive growth in the debt-to-GDP ratio. We estimate that Colombia has approximately 13 years before the fiscal effects begin to become more evident as a result of demographic change. Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Reviewers invited by journal 28 Apr, 2026 Editor assigned by journal 21 Apr, 2026 Submission checks completed at journal 21 Apr, 2026 First submitted to journal 19 Apr, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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