The risk of imbalances in the financing of social protection in the context of demographic ageing

In the next decades, developed countries will experience dramatic changes in their demographic trends. The retirement of the wide baby-boom generations, the increase in life expectancy and the decline in fertility ratios are likely to modify the size and the age-structure of their populations. The expected population ageing in European countries will burden the pension systems, especially wherever the pay-as-you-go pillar is predominant. Recently, migration has received a widespread attention as a solution to expected population decline and ageing in these countries. The flow of (young) migrants to developed countries is perceived as a means to alleviate the financial burden of pension systems. The aim of this contribution is to clarify the issue of aging on labour and capital markets in a macroeconomic perspective. A special attention is given to the risk of imbalances in the financing of social protection in the context of demographic ageing.