Demographic Pressure in the European Union Increasing Labor Market Participation, Migration or Old Age Participation to Maintain Fiscal Sustainability

37 Pages Posted: 12 Jun 2012

See all articles by Marga Peeters

Marga Peeters

De Nederlandsche Bank

Loek F. M. Groot

Utrecht University - Utrecht University School of Economics

Date Written: June 12, 2012

Abstract

On top of the sovereign debt crisis in the European Union, demographic change is exerting enormous pressure on public finances. We analyze four policy options: lowering pension benefits, increasing labor market participation of the native population, immigration and participation of older people. Our results show that the most publically indebted EU economies face the highest increases in public spending on the retiring baby boom generations over the coming decades. Fortunately for these economies, it turns out that adjusting their labor market participation is easier than for their neighboring economies within the EU. Increasing labor market participation to 60% keeps several countries largely out of the woods.

Keywords: demography, fiscal policy, labour, ageing, European Union

JEL Classification: C01, D6, E24, E62, F22, H53, H55, J11, J18, J21, J48, O57

Suggested Citation

Peeters, Marga and Groot, Loek F. M., Demographic Pressure in the European Union Increasing Labor Market Participation, Migration or Old Age Participation to Maintain Fiscal Sustainability (June 12, 2012). Available at SSRN: https://ssrn.com/abstract=2082875 or http://dx.doi.org/10.2139/ssrn.2082875

Marga Peeters (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Loek F. M. Groot

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

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