The Budgetary and Economic: Consequences of Ageing in the Netherlands

The Netherlands will be confronted with an almost doubling of the old-age dependency ratio over the next forty years. The costs of the ageing population are primarily reflected in larger expenditures on pensions and health care. This paper explores the consequences of ageing in a baseline scenario simulated with a dynamic general equilibrium model. The sensitivity of the results are discussed under alternative scenarios for the interest rate and population projections. Finally, the effects of two types of reform measures in the pay-as-you-go social security system are explored.