Economic Consequences of the Demographic Crisis and Population Ageing

Nina Petrukha, Serhii Petrukha and Yevhenii Velykyi
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Nina Petrukha: Kyiv National University of Construction and Architecture, Kyiv, Ukraine
Serhii Petrukha: West Ukrainian National University, Ternopil, Ukraine
Yevhenii Velykyi: Institute for Demography and Life Quality Problems of the National Academy of Sciences of Ukraine, Kyiv, Ukraine

Oblik i finansi, 2025, issue 3, 206-221

Abstract: Despite attempts to stabilize demographic processes, such phenomena as a decrease in the birth rate, an increase in the total mortality rate, active emigration, and rapid population aging significantly affect the socio-economic situation in Ukraine. The study aims to empirically assess the relationships between the demographic crisis (decrease in birth rate, increase in mortality, emigration, population aging) and key macroeconomic indicators of Ukraine in 2010-2024. The study uses statistical data from official sources, particularly the State Statistics Service of Ukraine and the Pension Fund of Ukraine. The methodology combines descriptive and structural-demographic analytics, Pearson pairwise correlations, and least-squares multiple linear regression with dummy shock variables (2014-2015 – military-political shock and macrofinancial crisis; 2020 – COVID-19 pandemic shock; 2022 – full-scale invasion of the Russian Federation and related security/migration/fiscal effects), which allows us to separate trend and event components. Three alternative dependent variables (vector Y) are considered: ln(GDP per capita), ratio of employed persons to pensioners, and share of pension expenditures in GDP. Key results are presented for the model with the dependent variable "share of pension expenditures in GDP, %". The results of the study show that under the conditions of fixed demographic and fiscal-income factors, an increase in GDP per capita is accompanied by a decrease in the share of pension expenditures in GDP (the effect of denominator expansion and partial fiscal consolidation); an increase in social protection expenditures is associated with an increase in this share; dummy shock variables record significant level shifts (positive for 2014–2015 and 2022, negative for 2020); the impact of the ratio of employed persons to pensioners is statistically significant in the basic specification, but sensitive to the inclusion of shocks and fiscal regressors, which reflects the institutional inertia of the short-term dynamics of the pension share. The results of this study allow to substantiate three interrelated areas of state policy: the introduction of medium-term budget guidelines and standardized indexation rules for the social sphere; accelerating productivity growth and reintegration of the workforce (including women, pre-retirement age, and retirement age); and parametric modernization of the pension system to curb the growth of the age burden.

Keywords: demographic crisis; population aging; labor potential; economic consequences; social policy; migration processes; demographic burden; demographic pressure; budget planning; public finances (search for similar items in EconPapers)
JEL-codes: H55 J11 O11 R23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:iaf:journl:y:2025:i:3:p:206-221

DOI: 10.33146/2518-1181-2025-3(109)-206-221

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