Country demographic and socio-economic structure and household consumption

Since the second half of 2023 and throughout 2024, household consumption in the euro area has remained sluggish despite declining interest rates, resilient labour demand, and rising real wages. While cyclical factors play a key role, this paper investigates whether structural demographic and socio-economic trends have also influenced consumption patterns. We examine the impact of population ageing, immigration, female employment, atypical work contracts, remote work, and online shopping. Our analysis, based on a panel of euro-area economies from 2008 to 2023, shows that the inclusion of structural variables improves the explanatory power of traditional consumption models. Higher female employment boosts consumption, while immigration and remote work reduce it, although their effects remain smaller than those of disposable income and interest rates. After the pandemic, the positive contribution of female employment has diminished, while the negative effect of remote work has become more relevant. Immigration has also had a negative impact, but its overall contribution to aggregate consumption remains positive compared with a counterfactual scenario without immigration. Taking structural factors into account is essential for medium-term forecasts.