Population Ageing and Gender Gap: A Dual Challenge to Economic Growth

Population ageing is one of the most significant social challenges in the modern globalized world. This demographic shift is causing potential labour shortages, a higher old-age dependency ratio, increased healthcare expenses and additional pressure on social services. These trends raise concerns about inter-generational equity and the unsustainability of pension systems. This paper investigates the impact of old-age dependency and gender inequality on economic growth in 35 European countries from 2000 to 2022 by employing the quantile regression method. Our research findings indicate that population ageing significantly and adversely impacts economic growth across all quantiles. Specifically, a 1% increase in the share of older persons in the working-age population is linked with a reduced economic output ranging from 0.03% to 0.07%. The negative effects of population ageing are particularly pronounced in high-income countries with greater economic dependency on an ageing population. Gender inequality measured by the gender inequality index jeopardizes economic growth in most quantiles, with its effects being more evident in the middle and higher quantiles, particularly at the 60th and 70th. However, it is essential to note that while statistically significant, the magnitude of this effect is relatively small: a 1% increase in gender inequality measured by gender inequality index is associated with only a 0.002–0.005% decrease in economic growth. Nonetheless, even such modest impacts may carry important implications for fostering inclusive and sustainable growth over the long term. In addition, enhancing legal and regulatory protection for women positively contributes to economic growth, especially in countries with the lowest and highest GDP per capita. We find that a 1% decrease in gender inequality, measured by the Women, Business and Law Index, is associated with a 0.08-0.16% increase in economic growth.