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The impact of population ageing on the labour force participation rate in Spain

Author

Listed:
  • Pilar Cuadrado

    (Banco de España)

  • José Manuel Montero

    (Banco de España)

  • Alejandro Fernández Cerezo

    (Banco de España)

  • Francisco José Rodríguez

    (Banco de España)

Abstract

Rationale Population ageing is one of the greatest structural challenges facing the Spanish economy. Foremost among its multiple effects is its contractionary impact on labour supply, which will foreseeably have major implications on both the functioning of the labour market and the potential growth or sustainability of public finances. Takeaways •Population ageing over the past decade has had an estimated negative impact of around 3.4 percentage points (pp) on Spain’s participation rate in 2022. This impact has been uneven by regions, with a sharper fall in the Cantabrian regions (Asturias, Cantabria and the Basque Country). •According to the latest National Statistics Institute’s population projections, the participation rate is set to drop a further 2.8 pp by 2030 owing to the continuing ageing process. Excluding the support of net immigration flows, the drop would be 1.6 pp greater. •In addition, the impact of ageing may deepen regional divergences, since the regions that have an older population and lower GDP per capita may be expected to experience the sharpest falls in the participation rate.

Suggested Citation

  • Pilar Cuadrado & José Manuel Montero & Alejandro Fernández Cerezo & Francisco José Rodríguez, 2023. "The impact of population ageing on the labour force participation rate in Spain," Economic Bulletin, Banco de España, issue 2023/Q3.
    • Handle: RePEc:bde:journl:y:2023:i:03:n:12
    DOI: https://doi.org/10.53479/33513
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    More about this item

    Keywords

    Labour force; participation rate; demographic ageing; Spanish regions;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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