DEMWEL - Demographic uncertainty and the sustainability of social welfare systems

This project focuses on the sustainability of welfare systems in EU countries in the face of ageing and demographic uncertainty. Although population ageing is expected and its consequences to the sustainability of the welfare systems have been widely explored, it is much less known that the amount or degree of ageing is highly uncertain. Unexpected ageing poses problems that emerge slowly, but are potentially large. This study addresses these problems. The extent of demographic uncertainty and its effects on welfare expenditure and its financing are demonstrated and analysed.

The main innovation is to bring new quantifications of demographic uncertainty into economic models and economic analysis of the effects of population ageing. The main tools are general equilibrium models with overlapping-generations structure. We compare the welfare systems in participating countries and look for systems and rules that perform well under uncertainty. The study will also look methodically at current arsenal of ageing policies and provide innovative alternatives and additions to it. Specific policy measures and rules are designed, and their effects on the welfare of different groups in the society, as well as their financial consequences, are explored. Simulation tools will also be applied extensively to find proper magnitudes of policy measures. The results will provide a deeper understanding of the challenges population ageing poses to Europe's socio-economic development.

The final conference will take place in Kittila, Finland on 21-23 March 2006.

A conference presenting the project results to policy makers will also be organised in CEPS, Brussels, on 29 March 2006. See the programme 29 March.

Participating institutes:
The scientific co-ordination of the project is undertaken by ETLA, the Research Institute of the Finnish Economy, Helsinki. The administrative and financial co-ordination of the project is ensured by CEPS, Centre for European Policy Studies, Brussels, Belgium. The other partner institutes are:

Most of these institutes are members of ENEPRI, the European Network of Economic Policy Research Institutes.

DEMWEL started on 1 January 2003, with finance from the European Commission, under the Quality of Life Programme of the 5th Research Framework Programme.