Working Paper: CEPR ID: DP1022
Authors: Jorgen von Hagen; Uwe Walz
Abstract: The European ageing process will lead to a dramatic rise in dependency ratios over the next decades. At the same time labour mobility will increase as a result of greater European economic integration. We analyse the implications of migration and ageing for European social security systems. With uncoordinated social security policies, national pensions funds compete for contributors whose mobility is the source of indeterminacy. The viability of coordination among national social security systems depends critically on which policy parameter it is based on. The benefits from coordination are limited and coordination is unlikely to yield efficient outcomes.
Keywords: migration; social security; ageing; european integration
JEL Codes: H55; H71; H87; J14; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ageing population (J11) | increased dependency ratios (J19) |
| increased dependency ratios (J19) | financial burden on active population (J26) |
| financial burden on active population (J26) | incentives for young individuals to migrate (J61) |
| migration (F22) | disruption of social security systems (H55) |
| disruption of social security systems (H55) | strategic interactions affecting pension levels (J32) |
| social security systems (H55) | agglomeration advantages for young individuals (R11) |
| policy parameters (E64) | existence of Nash equilibria in social security systems (H55) |
| tax rates (H29) | unstable Nash equilibrium (C72) |
| retirement incomes (J26) | stable Nash equilibrium (C72) |