Link to the University of Pittsburgh
Link to the University Library SystemContact us link
AEI Banner

Measuring Dependency Ratios using National Transfer Accounts. CEPS Working Document No. 420/April 2016

Barslund, Mikkel and von Werder, Marten (2016) Measuring Dependency Ratios using National Transfer Accounts. CEPS Working Document No. 420/April 2016. [Working Paper]

[img] PDF - Published Version
Download (1059Kb)


    It is now widely recognised that the socio-economic changes that ageing societies will bring about are poorly captured by the traditional demographic dependency ratios (DDRs), such as the old-age dependency ratio that relates the number of people aged 65+ to the working-age population. Future older generations will have increasingly better health and are likely to work longer. By combining population projections and National Transfer Accounts (NTA) data for seven European countries, we project the quantitative impact of ageing on public finances until 2040 and compare it to projected DDRs. We then simulate the public finance impact of changes in three key indicators related to the policy responses to population ageing: net immigration, healthy ageing and longer working lives. We do this by linking age-specific public health transfers and labour market participation rates to changes in mortality. Four main findings emerge: first, the simple old-age dependency ratio overestimates the future public finance challenges faced by the countries studied – significantly so for some countries, e.g. Austria, Finland and Hungary. Second, healthy ageing has a modest effect (on public finances) except in the case of Sweden, where it is substantial. Third, the long-run effect of immigration is well captured by the simple DDR measure if immigrants are similar to the native population. Finally, increasing the length of working lives is central to addressing the public finance challenge of ageing. Extending the length of working lives by three to four years over the next 25 years – equivalent to the increase in life expectancy – severely limits the impact of ageing on public transfers.

    Export/Citation:EndNote | BibTeX | Dublin Core | ASCII (Chicago style) | HTML Citation | OpenURL
    Social Networking:
    Item Type: Working Paper
    Uncontrolled Keywords: Public finances, national transfer account, population projection, longer working lives.
    Subjects for non-EU documents: Countries > Austria
    Countries > Finland
    Countries > Germany
    Countries > Hungary
    Countries > Slovenia
    Countries > Spain
    Countries > Sweden
    EU policies and themes > Policies & related activities > economic and financial affairs > general
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Working Documents
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 19 Apr 2016 10:56
    Number of Pages: 24
    Last Modified: 19 Apr 2016 10:56

    Actions (login required)

    View Item

    Document Downloads