The pension systems in European Union member states are very diverse, due to traditions how to provide retirement income, and to phases of the reform process. This system is also very important in the context of the social security of every individual or the society in which is settled. Since the system is influenced by changes in demographic fluctuations, living conditions, economic growth and so forth, it is very challenging for every European Union member state to keep the financial stability. To solve that problem, this paper aims to examine the financial stability of pension system in the European Union member states in the period 2003-2018. To obtain empirical results panel data analysis has been applied. The results showed that countries with higher old-age dependency ratio, life expectancy at age 65, replacement rate and poverty rate and public debt will also have higher pension expenditure, in average, while factors related to labour market negatively affects the pension spending.
The positive relationship between product market efficiency (PME) and productivity has been established in the existing literature. An important component of productivity is the PME, which is significantly affected by the quality of institutions. Weaker quality of institutions, higher levels of corruption and lower efficiency of product markets have been confirmed in countries that share similar characteristics with Croatia. The results show a positive relationship between the quality of institutions and PME while the link between corruption control and PME is negative. Exports and taxes were also significantly correlated with PME. The text additionally comments on the direction of this connection. The link between PME, institutional quality and corruption is particularly commented on in the context of Croatia and Slovenia as these are two areas that share a common past of approximately 500 years. To improve the PME, a prerequisite for greater productivity and consequently economic growth, it is necessary to change the institutional framework.
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