Ageing and the Welfare State: Securing Sustainability

29 Pages Posted: 2 Feb 2010

See all articles by Volker Meier

Volker Meier

CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Ifo Institute for Economic Research at the University of Munich

Martin Werding

Ruhr University of Bochum; CESifo (Center for Economic Studies and Ifo Institute); CESifo (Center for Economic Studies and Ifo Institute) - Social Policy and Labour Markets

Date Written: January 2010

Abstract

Over the next four decades, increasing old-age dependency ratios exert an enormous upward pressure on welfare spending in most developed countries. As this is mainly due to existing unfunded public pension schemes, many countries have embarked on far-reaching reforms in this area, strengthening actuarial fairness, modifying indexation rules, adding elements of prefunding and, last but not least, attempting to extend the period of economic activity. Efforts to contain costs may also be relevant with regard to public expenditure on health and long-term care but, thus far, no country has started to really deal with these issues. Still, some countries have made substantial progress in securing the long-term sustainability of their welfare systems. What remains to be considered is re-constructing the system of intergenerational transactions as a potential way of removing disincentives to raise children and invest in their human capital in the long run.

Keywords: demographic ageing, welfare state, public expenditure, fiscal sustainability, policy reforms

JEL Classification: H50, H68, J11

Suggested Citation

Meier, Volker and Werding, Martin, Ageing and the Welfare State: Securing Sustainability (January 2010). CESifo Working Paper Series No. 2916, Available at SSRN: https://ssrn.com/abstract=1545703

Volker Meier

CESifo (Center for Economic Studies and Ifo Institute for Economic Research) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Ifo Institute for Economic Research at the University of Munich ( email )

Poschingerstr. 5
Munich
Germany

Martin Werding (Contact Author)

Ruhr University of Bochum ( email )

Room GC 04/312
D-44780 Bochum, 44780
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschingerstr. 5
81679 Munich
Germany

CESifo (Center for Economic Studies and Ifo Institute) - Social Policy and Labour Markets ( email )

Munich, 81879
Germany

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