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Social Budget Expenditures Projection: the Role of Demographics

Evgeny L. Gorunov – Senior Researcher of the Gaidar Institute (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Population aging that is due to increase in life expectancy along with low fertility leads to an increase in demographic-related government budget spending. Our estimates show that the sum of pensions and health care expenditures on average will grow by 0.8–1.4 p.p. of GDP every ten years. By 2050, the burden on the budget will increase by 3.0–4.5 p.p. of GDP, while the weaker the demographics, the greater the load. The planned increase of the retirement age will stabilize social spending until 2029 with subsequent growth afterwards.

Key words: retirement age, fiscal policy, pension expenditures, healthcare expenditures, long-term projection, demography, population aging.