Abstract
The Italian demographic evolution shows a significant ageing of the population due to declining fertility levels and increasing life expectancy. In comparison with other European Union countries, Italy has the lowest total fertility rate and very low levels of higher education and young-age employment rates. The consequences of these sociodemographic trends will be a very high proportion of dependent population relative to the population in the labour force. These trends are supposed to influence the future evolution of the age-related expenditures: pensions, health care and education. In this paper we try to forecast the share of social expenditure on GDP using a dynamic simulation model which takes into account both macroeconomic and sociodemographic interrelationships. A multi state demographic projection model is linked to an overlapping generation model describing the macroeconomic equilibrium. The results show that around 2030 there will be a peak in the social expenditure ratio causing the need for further reforms in the social security and health care system.
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