IDEAS home Printed from https://ideas.repec.org/a/arh/jpopec/v10y2026i1p164-182.html

Can Europe Stay Productive? Macroeconomic and Demographic Pressures on Labor Productivity

Author

Listed:
  • Nuran H. Belet

    (Ankara Hacı Bayram University, ANKARA, Turkiye)

  • Shehzada G. Abbas

    (CERGE-EI, Prague, Czech Republic)

  • Shahzada R. Abbas

    (Ibn Haldun University, Istanbul, Turkiye)

Abstract

This study examines the impact of demographic shifts and broader macroeconomic factors on labor productivity in 23 European Union countries (EU-23) over the period 2005–2022. The analysis employs dynamic panel estimation techniques, including the Generalized Method of Moments (GMM), Random Effects (RE), and Autoregressive Distributed Lag (ARDL) models, to investigate the effects of population aging, unemployment, inflation, GDP per capita, research and development (R&D), life expectancy, and capital formation on productivity dynamics. Unit root and cointegration tests confirm the existence of long-run relationships among variables with different levels of integration. The findings indicate that inflation exerts a significant negative effect on productivity, whereas GDP per capita and R&D investment consistently enhance efficiency and output per worker. Life expectancy appears to have a negative impact, likely reflecting demographic pressures, while unemployment shows an unexpected positive association with productivity – possibly due to structural changes in the labor market and the adoption of new technologies. The ARDL error-correction model confirms long-run convergence, with persistent effects of productivity determinants over time. Overall, the results suggest that sustaining productivity growth in Europe depends on macroeconomic stability, innovation, human capital accumulation, and demographic adaptation.

Suggested Citation

  • Nuran H. Belet & Shehzada G. Abbas & Shahzada R. Abbas, 2026. "Can Europe Stay Productive? Macroeconomic and Demographic Pressures on Labor Productivity," Population and Economics, ARPHA Platform, vol. 10(1), pages 164-182, February.
    • Handle: RePEc:arh:jpopec:v:10:y:2026:i:1:p:164-182
    DOI: 10.3897/popecon.10.e170643
    as

    Download full text from publisher

    File URL: https://populationandeconomics.pensoft.net/article/170643/
    Download Restriction: no
    File URL: https://libkey.io/10.3897/popecon.10.e170643?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Modery, Wolfgang & Valderrama, Maria Teresa & Lopez-Garcia, Paloma & Albani, Maria & Anyfantaki, Sofia & Baccianti, Claudio & Barrela, Rodrigo & Bodnár, Katalin & Bun, Maurice & De Mulder, Jan & Falck, 2021. "Key factors behind productivity trends in EU countries," Occasional Paper Series 268, European Central Bank.
    2. Lopez-Garcia, Paloma & Szörfi, Béla, 2021. "Key factors behind productivity trends in euro area countries," Economic Bulletin Articles, European Central Bank, vol. 7.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hoepner, Martin & Di Carlo, Donato & Hassel, Anke, 2025. "Shielding competitiveness: Germany's wage policy during the inflation shock years in comparative perspective," LSE Research Online Documents on Economics 126485, London School of Economics and Political Science, LSE Library.
    2. Thomas Allen & Stéphane Dées & Carlos Mateo Caicedo Graciano & Laurent Clerc & Annabelle de Gaye & Noëmie Lisack & Fulvio Pegoraro & Marie Rabaté, 2026. "An analytical framework for assessing climate transition risks: an application to France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 162(1), pages 183-239, February.
    3. World Bank, 2024. "A Path to Inclusive Growth in the EU amid Inflation and Fiscal Constraints (Part 1)," World Bank Publications - Reports 42567, The World Bank Group.
    4. Bellocchi, Alessandro & Saraceno, Francesco & Travaglini, Giuseppe, 2025. "Closing the productivity–wage gap in the European Union: The role of the labor share," Structural Change and Economic Dynamics, Elsevier, vol. 75(C), pages 689-702.
    5. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    6. Lalinsky, Tibor & Anyfantaki, Sofia & Benkovskis, Konstantins & Bergeaud, Antonin & Bun, Maurice & Bunel, Simon & Colciago, Andrea & De Mulder, Jan & Lopez, Beatriz Gonzalez & Jarvis, Valerie & Krasno, 2024. "The impact of the COVID-19 pandemic and policy support on productivity," Occasional Paper Series 341, European Central Bank.
    7. Victor Yotzov, 2025. "The Impact of Euro Adoption on Labour Markets in Central and Eastern Europe: A Comparative Analysis of Structural Changes and Employment Dynamics," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 141-162.
    8. Bunel, Simon & Bijnens, Gert & Botelho, Vasco & Falck, Elisabeth & Labhard, Vincent & Lamo, Ana & Röhe, Oke & Schroth, Joachim & Sellner, Richard & Strobel, Johannes & Anghel, Brindusa, 2024. "Digitalisation and productivity," Occasional Paper Series 339, European Central Bank.
    9. Octavian Șerban, 2022. "The Multilevel Knowledge Economy Pyramid Model as a Flexible Solution to Address the Impact of Adverse Events in the Economy," Sustainability, MDPI, vol. 14(19), pages 1-15, September.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arh:jpopec:v:10:y:2026:i:1:p:164-182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Teodor Georgiev (email available below). General contact details of provider: https://populationandeconomics.pensoft.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.