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Aging and Pensions in the Euro Area

Author

Listed:
  • Philipp C. Rother
  • Marco Catenaro
  • Gerhard Schwab

Abstract

Population aging will impose a significant burden on European pay-as-you-go pension systems. This study presents an estimate of this burden for the four largest euro-area countries and assesses alternative reform approaches. With prudent and realistic assumptions, the present value of future pension deficits through 2050 is estimated at 64% of GDP, adding to the current average explicit debt stock of around 70% of GDP. Feasible parametric reforms represent no durable solution, as they can balance pension systems at best temporarily. A comprehensive reform, including changes to current systems and a move towards partial funding, can ensure permanent financial sustainability of the public pension system.

Suggested Citation

  • Philipp C. Rother & Marco Catenaro & Gerhard Schwab, 2004. "Aging and Pensions in the Euro Area," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(4), pages 593-593, December.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200412)60:4_593:aapite_2.0.tx_2-_
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    Citations

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    Cited by:

    1. Miriam Steurer, 2009. "Fertility Decisions and the Sustainability of Defined Benefit Pay-as-You-Go Pension Systems," Discussion Papers 2009-06, School of Economics, The University of New South Wales.
    2. Schuknecht, Ludger, 2004. "EU fiscal rules: issues and lessons from political economy," Working Paper Series 421, European Central Bank.
    3. Gugushvili, Alexi, 2007. "Giving the ageing of the population how can countries afford pay-as-you-go social insurance pensions?," MPRA Paper 2869, University Library of Munich, Germany.
    4. António Afonso, 2005. "Fiscal Sustainability: The Unpleasant European Case," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 1-19, March.
    5. Jorge A Chan-Lau, 2004. "Pension Funds and Emerging Markets," IMF Working Papers 04/181, International Monetary Fund.
    6. Rob Euwals & Marike Knoef & Daniel Vuuren, 2011. "The trend in female labour force participation: what can be expected for the future?," Empirical Economics, Springer, vol. 40(3), pages 729-753, May.
    7. Christine Fauvelle-Aymar, 2014. "The welfare state, migration, and voting rights," Public Choice, Springer, vol. 159(1), pages 105-120, April.
    8. Ghizlan Loumrhari, 2014. "Ageing, Longevity and Savings: The Case of Morocco," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 344-352.
    9. Loumrhari, Ghizlan, 2013. "Vieillissement démographique, longévité et épargne. Le cas du Maroc
      [Ageing population, longevity and save. The case of Morocco]
      ," MPRA Paper 50649, University Library of Munich, Germany.
    10. Eschenbach, Felix & Schuknecht, Ludger, 2002. "Asset prices and fiscal balances," Working Paper Series 0141, European Central Bank.
    11. Vito Tanzi, 2004. "The Stability and Growth Pact: Its Role and Future," Cato Journal, Cato Journal, Cato Institute, vol. 24(1-2), pages 57-69, Spring/Su.
    12. repec:ces:ifodic:v:1:y:2003:i:1:p:14567821 is not listed on IDEAS
    13. Xiaoxing Liu & Ying Zhang & Lin Fang & Yuanxue Li & Wenqing Pan, 2015. "Reforming China’s Pension Scheme for Urban Workers: Liquidity Gap and Policies’ Effects Forecasting," Sustainability, MDPI, Open Access Journal, vol. 7(8), pages 1-19, August.
    14. Eric Thode, 2003. "Securing Pensions for the Next Fifty Years - Achievements of Recent Reforms in Selected Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(1), pages 03-10, October.
    15. Muriel Bouchet, 2003. "The sustainability of the private sector pension system from a long-term perspective: the case of Luxembourg," BCL working papers 6, Central Bank of Luxembourg.

    More about this item

    Keywords

    aging; pensions; pay-as-you-go systems; fiscal sustainability;

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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