1. Demographic pressure versus labour market space across the globe - The optimal policy mix of increasing labour market participation, migration or capital inflows to maintain fiscal sustainability
2. Ageing labour forces and the reduction of working hours - Their impact on labour productivity in services and goods sectors in the GIIPS
3. Composing a book publication of the papers presented at the  MRM Workshop International financial integration of Mediterranean economies: Recent developments and future opportunities
4. Solidarity in social security systems, in particular pensions - some history and cliometric results
5. Albania - A European economy (in Dutch: Albanië - Een Europese economie) - booklet

On top of the sovereign debt crisis in the European Union, demographic change is exerting enormous pressure on public finances. We analyse four policy options: lowering pension benefits, increasing labour market participation of the native population, immigration and participation of older people. Our results show that the most publically indebted EU economies face the highest increases in public spending on the retiring baby boom generations over the coming decades. Fortunately for these economies, it turns out that adjusting their labour market participation is easier than for their neighbouring economies within the EU. Increasing labour market participation to 60% keeps several countries largely out of the woods.Demographic change across the globe puts pressure on labour markets and public finances. Most studies on ageing focus on the projected development of the old age dependency ratio, being the ratio of persons 65 or older relative to the working age population. This ratio gives a very incomplete picture of the (fiscal) pressure from demographic changes. In this study, besides the share of the dependent population composed of the young and the old, we also include the share of the working age population that is not active on the labour market, labelled as the labour market space. By analysing 21 developing and 29 developed economies across the globe, we cover 75% of the 9.3 billion people that the United Nations projects for the whole world in 2050. A new indicator, relating demographic pressure from fiscal spending to the available space at the labour market, enables us to quantify and compare the pressure-to-space across countries over the time span 2010-2050. The indicator points out that Poland, Turkey and Greece are most under pressure. Developing countries, such as Uganda, the Democratic Republic of Congo and Tanzania will experience a very low pressure up to 2050 in case their fiscal spending per young and elderly person remains at the current levels. In most of the countries under high pressure there seems to be room for using the labour market space by, for instance, working more hours or increasing the retirement age, as this will alleviate the fiscal pressure. This suggests a policy trade-off between maintaining publicly financed services to the dependent population and maintaining labour market space.On top of the sovereign debt crisis in the European Union, demographic change is exerting enormous pressure on public finances . We analyse the implications of four policy options for 21 EU countries: lowering pension benefits, increasing labour market participation, immigration or labour market participation of old age persons. Our results show that the most publically indebted EU economies face the highest increases in public spending on the retiring baby boom generations over the coming decades. Fortunately, for these economies, it turns out that they can more easily adjust their labour market participation than their neighbouring economies within the EU.

Should South-Mediterranean economies continue their financial integration in the world economy, considering their current stance and in view of the experiences of developed economies with the global financial crisis? The economies of the North-African rim, that is Morocco, Algeria, Tunisia, Libya and Egypt have become more exposed to the global economy during the 1990s and 2000s. The same holds to some extent for the Middle Eastern economies Palestine and Syria, while Jordan and Lebanon have become very open economies.In light of the unprecedented developments in the financial sectors of developed economies in the years 2008-2009 and in view of the current political Arab upheaval, this paper reviews the pros and cons of financial integration. It analyses financial integration indicators, as well as financial stability, and compares the South-Mediterranean region with other regions worldwide. Also available in hard cover.

The volatility of exchange rates leads to a reduction of international trade volumes, especially in emerging economies including the South Mediterranean countries. This study discusses the impact of exchange rates on bilateral South- North trade flows, which comes timely after the increased volatility between the Euro and Arab national currencies after the global financial crisis of 2008 that led to a sharp reduction at that time. We investigate the impact of exchange rate volatility on trade using monthly time series for the last ten years from 2000 up to 2011. By means of a Vector Auto Regression model with eXogenous variables (VARX) we estimate the responses of bilateral exports and imports to exchange rate fluctuations between South and North Mediterranean economies. A sample of three South Arab countries is selected including Egypt, Jordan, and Morocco. Causality tests are conducted to test the hypotheses. 

Our results show that the exports of goods from Egypt to the European Union decreases in comparison with the baseline by about 3% in case of an appreciation of 10% of the Egyptian pound vis-à-vis the euro, while the imports of Egypt from the EU increase by almost 10%. Also for Morocco, the imports from the EU react much stronger than the exports to the EU  to a similar size appreciation of the Moroccan dirham. Jordan is less import-dependent, though it  reacts strongly in terms of exports if its dollar-pegged currency appreciates vis-à-vis the euro. Finally, we conclude that the direct and indirect impact of actual changes in exchange rate is quite high.

   Most studies on ageing focus on the developed economies and on the old-age dependency ratio. This ratio gives a very incomplete picture of the (fiscal) pressure from demographic changes. In this study, we monitor the developing economies and include the share of the working-age population that is not active on the labor market and the public expenditures to the young and old. A new pressure-to-space indicator points out that countries like Greece, Austria, Italy and Poland are most under pressure, whereas developing countries Egypt, Nigeria, South Africa and Pakistan will experience a very low pressure up to 2050. The demographic structure of Egypt has the form of a pyramid, indicating that labour supply will grow at a relatively high rate for many years to come. Unless emigration flows will rise, Egypt needs to create jobs at a much higher pace than most other countries around the globe to absorb the new entrants at the domestic
labour market. Adding to this is the currently high share of 30-40% of the Egyptian employees working in the rather inefficient public sector. In order to quantify future developments at the labour market, this paper presents a labour supply model to analyse the impact of the ongoing demographic supply shocks on unemployment in Egypt. The findings indicate that the demographic labour supply will increase
unemployment in the short term as the Egyptian labour market will not be able to absorb the demographic labour supply, unless the Egyptian economy grows steadily at least at 5% for many years in a row. In the long term, the employment dividend can be reaped by productivity growth increases if the labour market starts functioning. The findings also point out that, for growth to accelerate rapidly, job creation should occur in the private and not in the public sector. The large public sector has been driving up government expenditures disproportionably, not only because of the existence of the high number of people employed in the public sector but also because of excessive public wage increases.
 

Eurocommissarissen moeten veel grotere bevoegdheden krijgen om in te grijpen in het economisch beleid van lidstaten. Verdere Europese integratie is nodig om een herhaling van de economische crisis zoals we die nu meemaken te voorkomen. Mede op voorstel van Nederland is een eerste stap gezet door eurocommissaris Olli Rehn de bevoegdheid te geven in te grijpen in het begrotingsbeleid van landen. Soortgelijke bevoegdheden zijn nodig om stijging van de ambtenarensalarissen en uitkeringen in toom te houden, de omvang van de publieke sector te beperken en de vergrijzingsproblematiek daadwerkelijk aan te pakken.

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Demographic change across the globe puts pressure on labour markets and public finances. Most studies on ageing focus on the projected development of the old age dependency ratio, being the ratio of persons 65 or older relative to the working age population. This ratio gives a very incomplete picture of the (fiscal) pressure from demographic changes. In this study, besides the share of the dependent population composed of the young and the old, we also include the share of the working age population that is not active on the labour market, labelled as the labour market space. By analysing 21 developing and 29 developed economies across the globe, we cover 75% of the 9.3 billion people that the United Nations projects for the whole world in 2050. A new indicator, relating demographic pressure from fiscal spending to the available space at the labour market, enables us to quantify and compare the pressure-to-space across countries over the time span 2010-2050. The indicator points out that Poland, Turkey and Greece are most under pressure. Developing countries, such as Uganda, the Democratic Republic of Congo and Tanzania will experience a very low pressure up to 2050 in case their fiscal spending per young and elderly person remains at the current levels. In most of the countries under high pressure there seems to be room for using the labour market space by, for instance, working more hours or increasing the retirement age, as this will alleviate the fiscal pressure. This suggests a policy trade-off between maintaining publicly financed services to the dependent population and maintaining labour market space.