Pension reform in a rapidly ageing country: the case of Ukraine

Ukraine has a rapidly ageing and declining population. A dynamic forward-looking Computable General Equilibrium(CGE)model with an explicitly modelled Pay-As-You-­Go pension scheme is constructed to perform simulations of different pension reform scenarios and investigate the impact of population ageing on a wide range of macroeconomic variables. It is shown that, changes in age structure will result in a significant negative impact on the economy and stability of the pension system. Analysis of the potential changes to the pension system is limited to modelling an increase of the pension age, keeping either the workers' contribution rate or replacement rate constant.Ukraine, CGE Modelling, Pension Reform, Ageing

The impact of population ageing on the economic development of Ukraine

According to United Nations population projections, the share of pensioners in the Ukrainian population will increase from 21% in 2005 to 37% in 2050. At the same time the share of the working age population (aged 20-59) will decline from 57% to 46%. This dissertation examines the impact that the changing age composition of the population of Ukraine will have on its economic development. There are three main contributions. First, an analysis of past demographic trends reveals that the current Ukrainian population structure is already “programmed” for population ageing and decline. Future demographic trends will only determine how quickly this will happen. Second, the changing age structure of the labour force will likely have an impact on the shape of the age-earnings profile. An econometric analysis of the Ukrainian Household Budget Survey reveals that, as in more developed market economies, the size of a cohort has a significant impact on the earnings of cohort members. The potential flattening of the age-earnings profile would disadvantage older workers belonging to larger cohorts. Third, a dynamic forward-looking Computable General Equilibrium (CGE) model is constructed to perform simulations of different demographic and labour market scenarios to investigate the impact of ageing on a wide range of macroeconomic variables. It is shown that, even under the most favourable scenario, changes in age structure will result in a significant negative impact on economy. Special attention is paid to the impact of ageing on the pension system. Three policy changes are modelled: an increase in pension age, an increase in pension contributions and a reduction in the replacement ratio. Individually these policy changes do not achieve sustainability, but combining an increase in pension age with higher effective pension contributions or a lower replacement ratio can bring stability to the system

Pension reform in a rapidly ageing country : the case of Ukraine

Ukraine has a rapidly ageing and declining population. A dynamic forward-looking Computable General Equilibrium(CGE)model with an explicitly modelled Pay-As-You-­Go pension scheme is constructed to perform simulations of different pension reform scenarios and investigate the impact of population ageing on a wide range of macroeconomic variables. It is shown that, changes in age structure will result in a significant negative impact on the economy and stability of the pension system. Analysis of the potential changes to the pension system is limited to modelling an increase of the pension age, keeping either the workers' contribution rate or replacement rate constant

The UK "Immigration Cap" : implications for Scotland

The main purpose of this paper is to consider how the Conservative Liberal-Democrats Coalition’s so-called "immigration cap" will impact on Scotland. The immigration cap is a set of not yet specified policies (working mainly through the points-based immigration system) aimed at lowering net-migration to the UK primarily by lowering immigration. While the UK Government wants to reduce net-migration to the UK, the Scottish Government wants to maintain a historically high level of net-migration in Scotland in part to achieve its population growth target and to ensure labour force growth. The two levels of government are pursuing policies that clearly conflict, since lowering net-migration to the UK will also likely lower net-migration to Scotland

The expenditure impacts of individual higher education institutions (HEIS) and their students on the Welsh economy : homogeneity or heterogeneity?

This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010a) for the case of Wales in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of Welsh HEIs. When we treat each of the twelve Higher Education Institutions (HEIs) that existed in Wales in 2006 as separate sectors in conventional input-output analysis, their expenditure impacts per unit of final demand appear rather homogenous, with the apparent heterogeneity of their overall impacts being primarily driven by scale. However, a disaggregation of their income by source reveals considerable variation in their dependence upon funding from the devolved Welsh Assembly Government and their ability to draw in income/funding from external sources. Acknowledging the binding budget constraint of the Welsh Assembly Government and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of HEIs upon the Welsh economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic for reasons that we identify

“Policy scepticism” and the impact of Scottish Higher Education Institutions (HEIs) on their host region: accounting for regional budget constraints under devolution

A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. Its denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the public-sector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity

"Policy scepticism" and the impact of Northern Irish higher education institutions (HEIS) on their host region : accounting for regional budget contraints

This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010b) for the case of Northern Ireland. The motivation is to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of Northern Irish HEIs. A comparative analysis will follow in due course. A "policy scepticism" has emerged that challenges the results of conventional regional HEI impact analyses. This denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the publicsector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity

An HEI-disaggregated input-output table for Scotland

This paper describes how the education sector of the Scottish Input-Output tables is disaggregated to identify a separate sector for each of Scotland’s twenty Higher Education Institutions (HEIs). The process draws on accounting and survey data to accurately determine the incomes and expenditures of each institution. In particular we emphasise determining the HEIs incomes source of origin to inform their treatment, as endogenous or exogenous, in subsequent analyses. The HEI-disaggregated Input-Output table provides a useful descriptive snapshot of the Scottish economy and the role of HEIs within it for a particular year, 2006. The table can be used to derive multipliers and conduct various impact studies of each institution or the sector as a whole. The table is furthermore useful to calibrate other multi-sectoral, HEI disaggregated models of regional economies, including Social Accounting Matrix (SAM) and computable general equilibrium (CGE) models

An HEI-disaggregated input-output table for Wales

This paper describes how the education sector of the Welsh Input-Output tables is disaggregated to identify a separate sector for each of Wales’s twelve Higher Education Institutions (HEIs). The process draws on accounting and survey data to accurately determine the incomes and expenditures of each institution. In particular we emphasise determining the HEIs incomes source of origin to inform their treatment, as endogenous or exogenous, in subsequent analyses. The HEI-disaggregated Input-Output table provides a useful descriptive snapshot of the Welsh economy and the role of HEIs within it for a particular year, 2006. The table can be used to derive multipliers and conduct various impact studies of each institution or the sector as a whole. The table is furthermore useful to calibrate other multi-sectoral, HEI-disaggregated models of regional economies, including Social Accounting Matrix (SAM) and computable general equilibrium (CGE) models

‘Policy scepticism’ and the impact of Scottish higher education institutions (HEIs) on their host region : accounting for regional budget constraints under devolution

A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. Its denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the public-sector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity