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The Impact of Population Ageing on Public Finances in the EU-27

Author

Listed:
  • María Cadaval-Sampedro
  • Santiago Lago-Peñas
  • Xoaquín Fernández-Leiceaga
  • Alejandro Domínguez-Lamela

Abstract

The paper analyses the impact of demographic ageing on age-related public expenditure in the EU-27 over the period 1992-2024. The analysis covers healthcare, long-term care (LTC), and pensions. The results reveal three patterns. First, demographic effects are heterogeneous across countries, driven by short-run responses that vary by spending category—limited in healthcare, absent in LTC. Second, advanced ageing (80+) tends to be more important for long-run dynamics, especially in healthcare. Third, Central and Eastern European economies show weaker or delayed responses, while Western and Nordic countries exhibit stronger adjustments, more evident in healthcare and LTC than in pensions, reflecting the decisive role of institutional design.

Suggested Citation

  • María Cadaval-Sampedro & Santiago Lago-Peñas & Xoaquín Fernández-Leiceaga & Alejandro Domínguez-Lamela, 2026. "The Impact of Population Ageing on Public Finances in the EU-27," IDEAGOV Working Papers WP2614, IDEAGOV - International Center for Decentralization and Governance.
    • Handle: RePEc:ida:wpaper:wp2614
    as

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    References listed on IDEAS

    as
    1. Yunus Aksoy & Henrique S. Basso & Ron P. Smith & Tobias Grasl, 2019. "Demographic Structure and Macroeconomic Trends," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(1), pages 193-222, January.
    2. Badi H. Baltagi, 2021. "Econometric Analysis of Panel Data," Springer Texts in Business and Economics, Springer, edition 6, number 978-3-030-53953-5, December.
    3. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 73-94, Winter.
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    Keywords

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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • 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
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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