Old Europe ages: Reforms and Reform Backlashes

Axel H. Boersch-Supan and Alexander Ludwig

No 15744, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The extent of the demographic changes in Europe is dramatic and will deeply affect future labor, financial and goods markets. The expected strain on public budgets and especially social security has already received prominent attention, but aging poses many other economic challenges that threaten growth and living standards if they remain unaddressed. This paper focuses on three large Continental European countries: France, Germany, and Italy. These countries have large pay-as-you-go pension systems and vulnerable labor markets. At the same time, they show remarkable resistance against pension and labor market reform. While there is no shortage of reform proposals to address population aging, most of those focused on pension and labor market reform, little is known about behavioral reactions to such reforms. This paper therefore sheds light on the potential benefits of pension and labor market reform for growth and living standards, taking into account behavioral reactions to specific reforms. Which behavioral reactions will strengthen, which will weaken reform policies? Can Old Europe maintain its standard of living even if behavioral reactions offset some of the current reform efforts?

JEL-codes: D13 E27 F16 F21 H55 J1 J21 (search for similar items in EconPapers)
Date: 2010-02
New Economics Papers: this item is included in nep-age and nep-eec
Note: AG
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Citations: View citations in EconPapers (17)

Published as Old Europe Ages: Reforms and Reform Backlashes , Axel Börsch-Supan, Alexander Ludwig. in Demography and the Economy , Shoven. 2011

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