Ageing and the welfare state: securing sustainability

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Over the next four decades, increasing old-age dependency ratios exert an enormous upward pressure on welfare spending in most developed countries. As this is mainly due to existing unfunded public pension schemes, many countries have embarked on far-reaching reforms in this area, strengthening actuarial fairness, modifying indexation rules, adding elements of prefunding and, last but not least, attempting to extend the period of economic activity. Efforts to contain costs may also be relevant with regard to public expenditure on health and long-term care but, thus far, no country has started to really deal with these issues. Still, some countries have made substantial progress in securing the long-term sustainability of their welfare systems. What remains to be considered is re-constructing the system of intergenerational transactions as a potential way of removing disincentives to raise children and invest in their human capital in the long run. Terms of use: Documents inJEL-Code: H50, H68, J11.

Public debt and economic growth – economic systems matter

“…At similar levels of public debt, investors will demand higher risk premia in an environment of systematically higher state activity, especially if the spending focus is on transfers and subsidies that are hard to reduce such as pensions or unemployment benefits. Implicit future liabilities are higher (especially considering population ageing, Meier and Werding 2010) and successful fiscal consolidation will be harder to achieve since opposition against such consolidation efforts will likely be stronger (Tagkalakis 2009 e.g. finds that less generous unemployment benefit schemes increase the likelihood of successful consolidation).…”

Guns Versus Butter Tradeoff: The Theory of Defense Quality Factor

“…Given that social security expenditures are somehow stable over time due to their nature of being the extension of governments' continuous commitments, the variance of these expenditures should be attributed to the aging population and the increasing number of veterans rather than cyclical preferences of governments [6]. For instance, in United States, social security expenditures have been rising due to the ongoing retirement of the so-called baby-boom generation born in the years following World War II when there had been an extraordinary rise in birth rates [7].…”

One pillar crumbling, the others too short: old-age provision in Germany

“…But a long-lasting increase in "structural" unemployment which was re-inforced, but clearly not caused, by German unification was another major driver behind the reforms which took place in the 1990s and early 2000s. In terms of the instruments applied, the reforms which have been enacted in several rounds share major ingredients with pension reforms taken in other developed countries (Diamond 2002;Disney 2003;Martin and Whitehouse 2008;Meier and Werding 2010).…”