Human Capital Investment and the Sustainability of Public Transfer Systems Across Europe

Hammer, B., Fürnkranz-Prskawetz, A., Gál, R.L., Vargha, L., & Istenič, T. (2018). Human Capital Investment and the Sustainability of Public Transfer Systems Across Europe. Journal of Population Ageing 12 427-452. 10.1007/s12062-018-9224-8.

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Project: Ageing Europe: An application of National Transfer Accounts (NTA) for explaining and projecting trends in public (AGENTA, FP7 613247)


We evaluate the sustainability of the public transfer systems in 24 EU countries using a new cohort-specific indicator, the Human Capital Investment Gap (HKIG). The indicator measures for a certain cohort the difference between the public benefits in old age and the public contributions of the child generation. Calculating the HKIG for the cohort born in 1950, we show that in none of the analyzed countries the contributions of the child generation will be sufficient to finance the old age benefits of the 1950 cohort, given the age- and employment-specific transfer pattern observed in 2010. This result holds for most of the countries even when assuming very optimistic employment scenarios. The decomposition of the HKIG into its components indicates that the cross-country differences in the HKIG are mainly driven by the level of public contributions and benefits, while retirement age and employment rates play a comparably minor role.

Item Type: Article
Research Programs: World Population (POP)
Depositing User: Romeo Molina
Date Deposited: 23 May 2018 13:28
Last Modified: 17 Jan 2020 10:12

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