Risks and Consequences of Demographic Changes in Romania

Bărbulescu, Răzvan
Publication date: 
JEL codes: 
D31 - Personal Income, Wealth, and Their Distributions, D60 - General, H21 - Efficiency; Optimal Taxation, H53 - Government Expenditures and Welfare Programs, H68 - Forecasts of Budgets, Deficits, and Debt, J13 - Fertility; Family Planning; Child Care; Children; Youth, J22 - Time Allocation and Labor Supply, J24 - Human Capital; Skills; Occupational Choice; Labor Productivity.
During the last decades we have experienced serious demographic changes observed in the decrease in both fertility and mortality and that led to the ageing of population. Despite the decrease in mortality is a good thing, the ageing make the current social security models ineffective on long term and therefore unsustainable.The demographic forecasts are pessimistic stating that the median age of population will change from 35 years to 53 years, making an unsustainable amount of people become socially assisted. Official forecasts state that the deficits necessary to sustain such a social assistance will lead Romania into a dreadful 633% public debt versus GDP.This working paper tries to find answers to questions like: What is the risk of continuing the current deficit model and how can we quantify them; What are the long term effects of the short term decisions leading to demographic changes; What are Romania’s choices for future decisions with respect to the analyzed risks and what can each decision lead to.
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