The Role of the Labor Market in Ensuring the Sustainability of the Pension System
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Technická Univerzita v Liberci
Technical university of Liberec, Czech Republic
Technical university of Liberec, Czech Republic
Abstract
The sustainability of the pension system is a key fiscal and social challenge that is exacerbated in the Czech Republic and other developed countries by demographic trends such as population aging, declining birth rates, and increasing life expectancy. These factors are putting increasing pressure on public finances and calling into question the stability of pay-as-you-go financing. The aim of this article is to comprehensively analyze the role of the labor market in ensuring the sustainability of the pension system and to identify key variables and their interrelationships. The analysis uses system dynamics methodology and a causal loop diagram (CLD) created in Stella Professional software. This diagram visualizes the complex system dynamics and feedback loops between key variables such as the number of workers, retirement age, system revenues and expenditures, and the influence of external factors. The results show that the sustainability of the system depends on a fragile balance that can be influenced by political interventions aimed at adapting the labor market. These include measures to support the employment of older workers and incentives to stay in employment longer. It is also crucial for long-term stability to take into account new trends such as flexible forms of employment, migration, and the impact of automation. Furthermore, it is necessary to emphasize the social acceptability of reforms and their accompanying measures in order to ensure not only financial stability but also intergenerational fairness and political acceptance.
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Subject(s)
Causal Loop Diagram, Stella, Expenditures, Labor Market, Pension System
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ISBN
978-80-7494-747-6