Economic consequences of ageing in Europe

Roberta R Adami, University of Westminster
Orla Gough, University of Westminster

Many European countries are faced with demographic challenges owing to declines in fertility rates as well as a general increase in ageing populations. These demographic developments have significant repercussions on pension reforms. This paper studies the evidence on the participation of ageing populations to the workforce in twelve European countries and examines the consequences of pension policies. For our analysis we use data from the Survey of Health, Ageing and Retirement in Europe (SHARE). This article shows, and reflects on the consequences of, some key changes introduced by European governments to their pension systems aimed at reducing early retirement and increasing the employment rates of older workers. We suggest that while the extension of the working life is a natural consequence of demographic changes and a necessary step to relieve pressures on current pension systems the new pension policies will need to tackle the economic challenges of ageing including the issue of adequacy of post-retirement incomes.