The Impact Of The Aging Population On The Sustainability Of Public Finances

Significant demographic changes have been observed in most countries of the world in recent decades. The aging phenomenon of the population leads to significant changes in the age structure of the workforce. These changes will probably have profound influences on economic activity, both internally and internationally. However, due to the size of public pension and health spending, the net impact of these changes will lead to an increase in government spending that implies a decline in public economies, as long as fiscal policies remain unchanged. Another concern at global level is that the aging of the population can lead to a reduction of savings in the private environment, which, in turn, leads to a reduction of investments and real production and thus convergence is affected. The aging of the population represents a long-term challenge at the level of the European states in the light of the fiscal pressure on the social insurance system and implicitly of the convergence indicators - the budget deficit and the public debt. This paper aims to identify the factors that significantly influence the risk of poverty after retirement age and the impact on the convergence process using a panel date analysis.