Aging population and public pensions: Theory and macroeconometric evidence

Abstract

Rapidly aging population in high-income countries has exerted additional pressure on the sustainability of public pension expenditure. We present a theoretical model of public pension expenditure under endogenous human capital, where the latter facilitates a substantial decrease in equilibrium fertility rate alongside the improvement in life expectancy. We demonstrate how higher life expectancy and human capital endowment facilitate a rise of net replacement rate. We then provide and examine an empirical model of old-age expenditure in a panel of 33 countries for the period 1998-2008. Our results indicate that increases in effective retirement age and total fertility rate would reduce age-related expenditure substantially. While higher net replacement rate would alleviate the risk of old-age poverty, further increases would add considerable pressure on the fiscal sustainability of public pensions.

The European Welfare State Regimes: Questioning the Typology During the Crisis

“…There are a number of papers that discuss the influence of the previous crises, and project the effects of the current crisis on the European welfare states in the institutional context. The findings contained in several papers were particularly influential for our research (Hemerijck et al 2009;Castles 2010;Ferreiro, Gómez 2014;Hartmann-Hirsch 2010;Josifidis et al 2010Josifidis et al , 2014Palier 2010;Stiller 2010;Adema et al 2011;Chung, Thewissen 2011;Chung, Van Oorschot 2011;Sacchi et al 2011;Starke et al 2011Starke et al , 2013Theodoropoulou, Watt 2011;Vis et al 2011;Yerkes, van der Veen 2011;Clasen et al 2012;De Beer 2012;Blot et al 2014;Hermann 2014;Peinado, Serrano 2014;Verbič, Spruk 2014). The authors listed above do not share unique opinion about the need, and type, of responses of the welfare state to the crisis in the context of long versus short term reforms, or convergent versus divergent reactions.…”

The analysis of perceptions and attitudes related to ageing in the Federation of Bosnia and Herzegovina

“…Authors such as Fischer and Reisen (1994), Hviding and Merette (1998) and Kohl and O'Brien (1998) analyse the effects that pension reforms have on accumulation of savings in public and private pension funds. Others, such as Roseveare et al (1996), Verbič and Spruk (2014) or Žokalj (2016) evaluate the effects that pension policies have on public expenditures, budget defi cits and public debt accumulation.…”

The old‐age pension law in Mexico: The promise of poverty in old age?

“…Over the past three decades there have been important changes in pension systems worldwide (Ambachtsheer, ; Arza, ; Holzmann, ; Marier, ; Mesa‐Lago, ; Scherman, ; Verbic and Spruk, ; Whitehouse et al, ). In Mexico and other countries, the main motivation for these changes (Lagoutte and Reimat, ; Ziegelmeyer and Nick, ) has been to prevent the state incurring fiscal deficits, but these changes have put at risk the welfare of people of retirement age (Calvo, Bertranou and Bertranou, ).…”