- Report
- Belanger Alain, Mazza Jacopo, Sabourin Patrick
- JRC Technical report
Abstract
Low fertility rates and long-life expectancies are igniting Europe’s fast ageing. This demographic trend poses a serious challenge to the public balances of most EU Member States. Understanding what measures can effectively address this challenge is of high priority for most governments. In this report, we evaluate the fiscal effect that a better labour market integration of immigrants, a longer working life, and a broader labour market participation of women will have on EU Member States’ fiscal balance in the next three decades via a demographic microsimulation model.First, we show that in the absence of any intervention, by 2040 the per-capita fiscal balance will be negative in all but two Member States. Next, we focus on the effect that immigration can have on the future per-capita fiscal balance. In particular, we concentrate on two phenomena: an increase in the education of the immigrant population to Europe and a better labour market integration of immigrants in the hosting labour markets. Both scenarios result in an improvement over the baseline, albeit only a better labour market integration generates significant gains.
Last, we focus on the effect of policies aiming at broadening the labour market participation of older Europeans by postponing their retirement, and the effect of policies promoting the labour market participation of women. We find that the last scenario is the one generating the highest gains even though these gains fall well short of balancing the effects of ageing.