Skip to content

Journal Article

Fiscal sustainability and demographic change: a micro-approach for 27 EU countries

Authors

Publication date

Aug 2017

Abstract

The effect of demographic change on the labor force and on fiscal revenues is topical in light of potential pension shortfalls. This paper evaluates the effect of demographic changes between 2010 and 2030 on labor force participation and government budgets in the EU-27. Our analysis involves the incorporation of population projections, and an explicit modeling of the supply and demand side of the labor market. Our approach overcomes key shortcomings of most existing studies that focus only on labor supply when assessing the effects of policy reforms. Ignoring wage reactions greatly understates the increase in fiscal revenues, suggesting that fiscal strain from demographic change might be less severe than currently perceived. Beyond, our micro-based approach captures the impact on fiscal revenues more accurately than previous studies. Finally, as a policy response to demographic change and worsening fiscal budgets, we simulate the increase in the statutory retirement age. Our policy simulations confirm that raising the statutory retirement age can balance fiscal budgets in the long run.

Published in

International Tax and Public Finance

Volume and page numbers

24 , 575 -615

DOI

http://dx.doi.org/10.1007/s10797-017-9462-3

ISSN

16

Subjects

Pensions, Demography, Labour Market, Economics, Microsimulation, and Finance

Links

University of Essex, Albert Sloman Library Periodicals *restricted to University of Essex registered users* - http://serlib0.essex.ac.uk/record=b1617625~S5


Related publications

  1. Fiscal sustainability and demographic change: a micro approach for 27 EU countries

    Mathias Dolls, Karina Doorley, Alari Paulus, et al.

    1. Pensions
    2. Demography
    3. Labour Market
    4. Economics
    5. Microsimulation
  2. Fiscal sustainability and demographic change: a micro approach for 27 EU countries

    Mathias Dolls, Karina Doorley, Alari Paulus, et al.

    1. Pensions
    2. Demography
    3. Labour Market
    4. Economics
    5. Microsimulation
    6. Finance

#524531


Research home

Research home

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest