Demographic changes and fiscal policy in Mena countries

Abstract EN

In this study, I examine the links between demographic change and fiscal policy in MENA countries, focusing specifically on the economic impacts coming from the conflict between social security and education, which are two of the most government programs in any country.

The paper is unique as it incorporates a political economy model of education given expected increases in social security spending in the background.

Labor movements and growth results are expected to depend significantly on the return to education.

A sensitivity analysis on the parameter that shows the return to education spending reveals that MENA countries would suffer significantly from a lower return to education.

This scenario highlights the importance of returns to education for the growth results in the MENA region.

It is also important to note that the MENA region could potentially experience significant positive economic growth if it can maintain a high return to education and also attract more capital, despite a rising fiscal burden coming from the social security system.