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The impact of migration assumption on ageing expenditure forecasts

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  • Aaron George Grech

Abstract

The Maltese economy has experiences relatively high migration flows in recent years. As a result, in contrast to other EU countries, Malta’s workforce has not aged. However, this inflow has complicated the task of making reliable population projections, with these being revised upwards substantially every few years. While administrative data suggest that most migrants have a short stay in Malta, the underlying assumptions of existing population projections imply that many recent migrants will stay in Malta until retirement. This assumption is boosting upwards considerably long-term forecasts of ageing costs, with potential impacts on credit ratings, sustainability assessments and policy making. On the other hand, if one modifies population projections to reflect existing information on migrant’s remigration tendencies, the picture that emerges is significantly different, with GDP trends remaining unaffected while Malta’s long-term trend in spending on pensions, health and long-term care come more in line with the projected EU average.

Suggested Citation

  • Aaron George Grech, "undated". "The impact of migration assumption on ageing expenditure forecasts," CBM Policy Papers PP/07/2021, Central Bank of Malta.
    • Handle: RePEc:mlt:ppaper:0721
    as

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    File URL: https://www.centralbankmalta.org/site/Publications/Economic%20Research/2021/policy-note-the-impact-of-migration-assumptions.pdf?revcount=8099
    File Function: First version, 2021
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    References listed on IDEAS

    as
    1. George Grech, Aaron, 2017. "Did Malta’s Accession to the EU Raise its Potential Growth? A Focus on the Foreign Workforce," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 32(4), pages 873-890.
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    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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