Theoretical and Applied Economics (Mar 2017)
Sustainability of social security systems in EU countries: Panel cointegration analysis with multiple structural breaks under cross-sectional dependence
Abstract
In this study, the sustainability of social security policies in EU countries was analyzed by panel data method with multiple structural breaks under cross-sectional dependence for the 1990-2013 periods. The existence of cointegration was tested by Basher and Westerlund (2009) method and series were found to be cointegrated. Cointegration coefficients were estimated by AMG method and it was determined that social security policies are sustainable in a weak form in these countries; when the social security systems’ expenditure is increased by 1%, revenues are increased by 0.86% and revenues of the system cannot compensate the expenses. Austria has the highest rate of sustainability of the social security system while Ireland and Finland have the lowest rates.
