Demographic changes and their links to the long-term sustainability of public finances in European countries

Demographic changes and their links to the long-term sustainability of public finances have come to the forefront of research and economic-political discussions in recent years. The submitted dissertation thesis follows up on this research and aims to contribute to the economic-political debate. The aim of this thesis is to analyze the effect of demographic changes on the long-term sustainability of public finances in the countries of the European Union. Standard methods of comparative and graphic analysis are used, and – as an addition to previous research – the method of multicriteria analysis is applied, which brings new perspectives and results. In the thesis, four hypotheses derived from previous research and theoretical concepts were evaluated using the aforementioned methods. The hypothesis that population aging is the main determinant of the long-term unsustainability of public finances was rejected. The results of comparative and multicriteria analysis likewise proved that demographic factors are not a decisive determinant of the sustainability of public finances; however, the design of the pension system is an important element. Furthermore, the hypothesis that Czech public finances are unsustainable due to population ageing was also rejected. Using all methods, the public finances of the Czech Republic are assessed as unsustainable in the long term, although better values of demographic development parameters are expected for the Czech Republic in the future than for many other European Union countries. According to the results of the analysis, the main reason for this unsustainability is the design of the pension system. The results of the research also show that fertility does not have a major impact on long-term sustainability, so it is more appropriate to focus political efforts on reforming the pension system rather than on policies supporting the fertility. Based on the results of the analysis, the so-called sustainability factors (i.e. linking certain parameters of the pension system to life expectancy, demographic conditions or the financial balance of the system) are a suitable element of the pension system in terms of its sustainability.