Faculty of Economics and Business Administration Publications Database

Aging in Europe: Reforms, International Diversification and Behavioral Reactions

Börsch-Supan, Axel
Härtl, Klaus
Volume: 104
Number: 5
Pages: 224 - 229
Month: May
ISSN-Print: 2574-0768
Link External Source: Online Version
Year: 2014

The extent of demographic changes in Europe is much more drastic than in the United States. This paper studies the effects of population aging on the interactions between economic growth and living standards in Europe with labor market and pension reform, behavioral adaptations, and international capital flows. Our analysis is based on an overlapping generations model with behavioral reactions to reform which is extended to the multi-country situation typical for Europe. While the negative effects of population aging on growth in Europe can in principle be compensated by reforms and economic adaptation mechanisms, they may be partially offset by behavioral reactions.