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Europe's Demographic Deficit

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  • Sinn, Hans-Werner

Abstract

Due to exceptionally low birth rates, the dynamism of Europe will be lagging behind that of other regions of the world for the time being. The paper assembles a rich body of comparative empirical data to clarify the extent of the demographic problems for the EU countries. It advances the view that the low birth rates in part result from early government interventions in terms of socializing the fruits of human capital investment via the pay-as-you-go pension system. To mitigate the extent of socialization, it considers a policy of freezing the contribution rates within the existing pensions systems, forcing the childless to save and providing an additional tax-financed "child pension" tax to parents.

Suggested Citation

  • Sinn, Hans-Werner, 2005. "Europe's Demographic Deficit," Munich Reprints in Economics 934, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:934
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    File URL: https://epub.ub.uni-muenchen.de/934/1/sinn-europes-demographic-deficit.pdf
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    References listed on IDEAS

    as
    1. Martin Feldstein, 1995. "Would Privatizing Social Security Raise Economic Welfare?," NBER Working Papers 5281, National Bureau of Economic Research, Inc.
    2. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1335-1357, July.
    3. Sinn, Hans-Werner, 1997. "The Value of Children and Immigrants in a Pay-As-You-Go Pension System: A Proposal For a Partial Transition to a Funded System," CEPR Discussion Papers 1734, C.E.P.R. Discussion Papers.
    4. Homburg, Stefan, 1997. "Old-age Pension Systems: A Theoretical Evaluation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 233-246.
    5. Hans-Werner Sinn, 1999. "Pension Reform and Demographic Crisis: Why a Funded System is Needed and why it is not Needed," CESifo Working Paper Series 195, CESifo.
    6. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    7. Cigno, Alessandro & Rosati, Furio C., 1996. "Jointly determined saving and fertility behaviour: Theory, and estimates for Germany, Italy, UK and USA," European Economic Review, Elsevier, vol. 40(8), pages 1561-1589, November.
    8. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    9. Hans-Werner Sinn & Martin Werding, 2000. "Reducing the level of pension payments and a partially funded social insurance system - Ifo recommendations for a consolidation of the pay-as-you-go system," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 53(18), pages 12-25, June.
    10. Alessandro Cigno & Martin Werding, 2007. "Children and Pensions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033690, December.
    11. Robert Fenge & Martin Werding, 2004. "Ageing and the tax implied in public pension schemes: simulations for selected OECD countries," Fiscal Studies, Institute for Fiscal Studies, vol. 25(2), pages 159-200, June.
    12. Sinn, Hans-Werner & Uebelmesser, Silke, 2003. "Pensions and the path to gerontocracy in Germany," European Journal of Political Economy, Elsevier, vol. 19(1), pages 153-158, March.
    13. Heikki Oksanen, 2001. "A Case for Partial Funding of Pensions with an Application to the EU Candidate Countries," CESifo Working Paper Series 466, CESifo.
    14. Alessandro Cigno & Luca Casolaro & Furio C. Rosati, 2000. "The Role of Social Security in Household Decisions: Var Estimates of Saving and Fertility Behaviour in Germany," CESifo Working Paper Series 394, CESifo.
    15. Heikki Oksanen, 2001. "A case for partial funding of pensions with an application to the EU Candidate Countries," European Economy - Economic Papers 2008 - 2015 149, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    16. Isaac Ehrlich & Jinyoung Kim, 2005. "Social Security, Demographic Trends, and Economic Growth: Theory and Evidence from the International Experience," NBER Working Papers 11121, National Bureau of Economic Research, Inc.
    17. Hans-Werner Sinn, 2000. "Why a Funded Pension System is Needed and Why It is Not Needed," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 389-410, August.
    18. Heikki Oksanen, 2002. "Pension reform: key issues illustrated with an actuarial model," European Economy - Economic Papers 2008 - 2015 174, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    19. Hans-Werner Sinn & Martin Werding, 2001. "Migration after EU enlargement: Were is the problem?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(08), pages 18-27, May.
    20. Hans-Werner Sinn, 2004. "EU Enlargement, Migration and the New Constitution," CESifo Economic Studies, CESifo Group, vol. 50(4), pages 685-707.
    21. repec:mhr:btrfin:urn:isbn:9783161629983 is not listed on IDEAS
    22. Hans-Werner Sinn & Martin Werding, 2001. "Immigration Following EU Eastern Enlargement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(02), pages 40-47, October.
    23. Uebelmesser Silke, 2004. "Political Feasibility of Pension Reforms," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-24, September.
    24. Brunner, Johann K., 1996. "Transition from a pay-as-you-go to a fully funded pension system: The case of differing individuals and intragenerational fairness," Journal of Public Economics, Elsevier, vol. 60(1), pages 131-146, April.
    25. Cigno, Alessandro & Camillio Rosati, Furio, 1997. "Rise and fall of the Japanese saving rate: The role of social security and intra-family transfers," Japan and the World Economy, Elsevier, vol. 9(1), pages 81-92, March.
    26. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 146, pages 640-647.
    27. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    28. Sinn, Hans-Werner, 2000. "Why a Funded Pension System is Useful and Why It is Not Useful," Munich Reprints in Economics 19859, University of Munich, Department of Economics.
    29. Werding, Martin, 1998. "Zur Rekonstruktion des Generationenvertrages," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 3, number urn:isbn:9783161468896, December.
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    Cited by:

    1. Martin Werding, 2006. "Child pension and the obligation to make provision for old age - the Ifo proposal for a solution to the demographic crisis of the pension system," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(07), pages 44-53, April.
    2. Martin Werding, 2005. "Survivor Benefits and the Gender Tax Gap in Public Pension Schemes: Observations from Germany," CESifo Working Paper Series 1596, CESifo.
    3. Koen Caminada & Kees Goudswaard, 2008. "Revenue Effects of Tax Facilities for Pension Savings," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(2), pages 233-246, June.
    4. Marga Peeters & Loek Groot, 2012. "Demographic Pressure in the European Union," EERI Research Paper Series EERI_RP_2012_11, Economics and Econometrics Research Institute (EERI), Brussels.
    5. Jan Bonenkamp & Lex Meijdam & Eduard Ponds & Ed Westerhout, 2017. "Ageing-driven pension reforms," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 953-976, July.
    6. Robert Fenge & Jakob von Weizsäcker, 2006. "Pension bonus of the generation with few grandchildren," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(05), pages 11-18, March.

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    More about this item

    Keywords

    pension system; birth rate; human capital; demography;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J1 - Labor and Demographic Economics - - Demographic Economics

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