The ageing of society, health services provision and taxes

This paper investigates the outcome of ageing on taxes and hospitalisation of the elderly using panel data on 23 Swedish county councils 1980–1999. We test two hypotheses; whether a larger share of elderly has no negative effect on bed days per elderly person and no positive effect on tax rates. We reject the first hypothesis but fail to reject the second hypothesis. Further we cannot reject the hypothesis of a unitary elasticity of the share of elderly on bed days per elderly person. These results imply that the old bear the entire cost of adjustment when the population grows older.