The impact of migration assumption on ageing expenditure forecasts

Aaron Grech

No PP/07/2021, CBM Policy Papers from Central Bank of Malta

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.

JEL-codes: H55 J11 O15 (search for similar items in EconPapers)
Pages: 16 pgs
New Economics Papers: this item is included in nep-age and nep-mig
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