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How reducing differentials in education and labor force participation could lessen workforce decline in the EU-28

Author

Listed:
  • Guillaume Marois

    (International Institute for Applied Systems Analysis (IIASA))

  • Alain Bélanger

    (Institut National de la Recherche Scientifique (INRS))

  • Patrick Sabourin

    (International Institute for Applied Systems Analysis (IIASA))

Abstract

Background: Population ageing is unavoidable in Europe, but perhaps its impact on labor force is not. In the context of a new demographic regime of high immigration and low fertility, differentials in labor force participation and educational attainment can be more consequential for the labor force than either the number of immigrants or structure of the overall population. Objective: The objective of this paper is to investigate how improvements in both educational attainment (especially among children with a low educated mother or an immigration background) and labor force participation (especially of women and immigrants) could impact the future labor force in the European Union. Methods: We used a microsimulation model called CEPAM-Mic to project the labor force of EU28 countries. CEPAM-Mic incorporates heterogeneity among different groups and allows the development of alternative scenarios concerning educational attainment and labor force participation of disadvantaged groups. Results: Removing inequalities between subgroups in educational attainment and labor force participation drastically changes the prospective labor force size and labor force dependency ratio (LFDR) in the EU. Assuming perfect equality, the anticipated decline in the labor force size reduces by 54%, while the expected increase in the LFDR narrows by 70%. Conclusions: Population aging is a destiny in large part driven by past demographic behaviors, but its anticipated consequences in terms of labor force size and labor force dependency ratio may be avoidable. Contribution: This paper features a policy-oriented use of microsimulation population projections. The alternative scenarios developed go beyond traditional demographic scenarios that can only set assumptions on fertility, mortality and migration.

Suggested Citation

  • Guillaume Marois & Alain Bélanger & Patrick Sabourin, 2019. "How reducing differentials in education and labor force participation could lessen workforce decline in the EU-28," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 41(6), pages 125-160.
    • Handle: RePEc:dem:demres:v:41:y:2019:i:6
    DOI: 10.4054/DemRes.2019.41.6
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    References listed on IDEAS

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    1. Alicia Adsera & Barry Chiswick, 2007. "Are there gender and country of origin differences in immigrant labor market outcomes across European destinations?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(3), pages 495-526, July.
    2. Gary S. Becker & H. Gregg Lewis, 1974. "Interaction between Quantity and Quality of Children," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 81-90, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Michael Christl & Alain Bélanger & Alessandra Conte & Jacopo Mazza & Edlira Narazani, 2022. "Projecting the fiscal impact of immigration in the European Union," Fiscal Studies, John Wiley & Sons, vol. 43(4), pages 365-385, December.
    2. René Böheim & Thomas Horvath & Thomas Leoni & Martin Spielauer, 2023. "The Impact of Health and Education on Labor Force Participation in Aging Societies: Projections for the United States and Germany from Dynamic Microsimulations," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(3), pages 1-35, June.
    3. Wei Cui & An-Wei Wan & Yuan Zheng, 2024. "Mechanisms of the effect of fertility policies on the labor-capital income gap," PLOS ONE, Public Library of Science, vol. 19(4), pages 1-25, April.
    4. Rentería, Elisenda & Souto, Guadalupe & Istenič, Tanja & Sambt, Jože, 2024. "Generational economic dependency in aging Europe: Contribution of education and population changes," The Journal of the Economics of Ageing, Elsevier, vol. 27(C).
    5. Rocha de Jesus Fernandes, Anderson & Lanza Queiroz, Bernardo, 2024. "Aging, education and some other implications for the silver dividend in developing countries: Evidence from Brazil," The Journal of the Economics of Ageing, Elsevier, vol. 27(C).

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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • Z0 - Other Special Topics - - General

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