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Demographics, labour market, and pension sustainability in Hungary

Author

Listed:
  • András Olivér Németh

    (Department of Economic Policy, Corvinus University of Budapest, Hungary)

  • Petra Németh

    (Department of Macroeconomics, Corvinus University of Budapest, Hungary)

  • Péter Vékás

    (Department of Operations Research and Actuarial Sciences, Corvinus University of Budapest, Hungary)

Abstract

The sustainability of an unfunded pension system depends highly on demographic and labour market trends, i.e. how fertility, mortality, and employment rates change. In this paper we provide a brief summary of recent developments in these fields in Hungary and draw up a picture of the current situation. Then, we forecast the path of the economic old-age dependency ratio, i.e. the ratio of the elderly and employed populations. We make different alternative assumptions about fertility, mortality, and employment rates. According to our baseline scenario the dependency ratio is expected to rise from 40.6% to 77% by 2050. Such a sharp increase makes policy intervention inevitable. Based on our sensitivity analysis, the only viable remedy is increasing the retirement age.

Suggested Citation

  • András Olivér Németh & Petra Németh & Péter Vékás, 2020. "Demographics, labour market, and pension sustainability in Hungary," Society and Economy, Akadémiai Kiadó, Hungary, vol. 42(2), pages 146-171, June.
    • Handle: RePEc:aka:soceco:v:42:y:2020:i:2:p:146-171
    Note: This research has been supported by the European Union and Hungary and co-financed by the European Social Fund through the project EFOP-3.6.2-16-2017-00017, titled “Sustainable, intelligent and inclusive regional and city models”.
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    More about this item

    Keywords

    pensions; sustainability; demography; employment; dependency ratio;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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