Demographics, labour market, and pension sustainability in Hungary

András Olivér Németh (), Petra Németh () and Péter Vékás ()
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András Olivér Németh: Department of Economic Policy, Corvinus University of Budapest, Hungary
Petra Németh: Department of Macroeconomics, Corvinus University of Budapest, Hungary
Péter Vékás: Department of Operations Research and Actuarial Sciences, Corvinus University of Budapest, Hungary

Society and Economy, 2020, vol. 42, issue 2, 146-171

Abstract: The sustainability of an unfunded pension system depends highly on demographic and labour market trends, i.e. how fertility, mortality, and employment rates change. In this paper we provide a brief summary of recent developments in these fields in Hungary and draw up a picture of the current situation. Then, we forecast the path of the economic old-age dependency ratio, i.e. the ratio of the elderly and employed populations. We make different alternative assumptions about fertility, mortality, and employment rates. According to our baseline scenario the dependency ratio is expected to rise from 40.6% to 77% by 2050. Such a sharp increase makes policy intervention inevitable. Based on our sensitivity analysis, the only viable remedy is increasing the retirement age.

Keywords: pensions; sustainability; demography; employment; dependency ratio (search for similar items in EconPapers)
JEL-codes: H55 J11 J18 J21 (search for similar items in EconPapers)
Date: 2020
Note: This research has been supported by the European Union and Hungary and co-financed by the European Social Fund through the project EFOP-3.6.2-16-2017-00017, titled “Sustainable, intelligent and inclusive regional and city models”.
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