Assessing the impact of demographic ageing on the welfare state in Italy

Issue title: 1996 Siena Group Seminar

Subtitle: A dynamic simulation

Article type: Research Article

Authors: Baldacci, Emanuele^{; 1} | Lugaresi, Sergio

Affiliations: Italian Statistical Office, General Government Division, Via Tuscolana 1782, 00173 Rome, Italy. Tel.: +39 6 72900908, Fax: +39 6 7218999, E-mail: e.baldacci@agora.stm.it and slugaresi@ex-calhq.it

Note: [1] This paper has been prepared by the authors as part of a broader research project on dynamic simulation models of social expenditure at the General Government Division of the Italian Statistical Office. The paper benefitted from comments of the participants to the Siena group meeting held in Paris, June 1996. The comments of Domenico Fanizza are gratefully acknowledged. Obviously all the responsabilities for any errors remain on our side.

Abstract: The Italian demographic evolution shows a significant ageing of the population due to declining fertility levels and increasing life expectancy. In comparison with other European Union countries, Italy has the lowest total fertility rate and very low levels of higher education and young-age employment rates. The consequences of these sociodemographic trends will be a very high proportion of dependent population relative to the population in the labour force. These trends are supposed to influence the future evolution of the age-related expenditures: pensions, health care and education. In this paper we try to forecast the share of social expenditure on GDP using a dynamic simulation model which takes into account both macroeconomic and sociodemographic interrelationships. A multi state demographic projection model is linked to an overlapping generation model describing the macroeconomic equilibrium. The results show that around 2030 there will be a peak in the social expenditure ratio causing the need for further reforms in the social security and health care system.

DOI: 10.3233/SJU-1996-13305

Journal: Statistical Journal of the United Nations Economic Commission for Europe, vol. 13, no. 3, pp. 255-273, 1996