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Impact of population ageing on fiscal balance in the European Union

Author

Listed:
  • Sanja Filipović

    (Singidunum University, Belgrade (Serbia))

  • Marko Miljković

    (University of Belgrade - Faculty of Transport and Traffic Engineering, Belgrade (Serbia))

Abstract

In the past two decades, the EU has experienced low fertility rates and declining mortality rates leading to population ageing. Although increasing immigration and longer life expectancy reinforced population growth, these trends could not counterbalance the negative impact of low birth rates on labour supply. Demographic transition towards an aging society is characterised by increase of public health and pension expenditures, as well as decrease of tax revenues that are triggers for fiscal imbalance. The paper aims to analyse the effects of population ageing on government fiscal balance in the EU-27 by applying modern methods of panel data analysis in the period 2001-2021. The dependent variable is general government fiscal balance, while the explanatory variables are related to demographic transition indicators (population aged over 64 in total population, old-age dependency ratio, and health expenditures) and macroeconomic control variables. The results of research show that population ageing has created a significant negative impact on fiscal balance of the EU countries, which was confirmed by all the analysed models. The fixed-effects panel threshold model did not identify a statistically significant threshold of any demographic transition indicator, concluding that population ageing has equally negatively affected fiscal balance, independent of the values of demographic transition indicators.

Suggested Citation

  • Sanja Filipović & Marko Miljković, 2024. "Impact of population ageing on fiscal balance in the European Union," Stanovnistvo, Institute of Social Sciences, Belgrade, Serbia, vol. 62(2), pages 231-250, November.
    • Handle: RePEc:eto:stanov:v:62:y:2024:i:2:id:648
    DOI: 10.59954/stnv.648
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    References listed on IDEAS

    as
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    Cited by:

    1. Andrea Seberíni & Alena Kaščáková & Miroslav Hužvár, 2026. "Gender and Educational Inequalities in Active Ageing: Evidence from Slovakia in a European Context," Stanovnistvo, Institute of Social Sciences, Belgrade, Serbia, vol. 64(1), pages 177-202, June.

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