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Country demographic and socio-economic structure and household consumption

Author

Listed:
  • Francesca Carta

    (Bank of Italy)

  • Domenico Depalo

    (Bank of Italy)

Abstract

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.

Suggested Citation

  • Francesca Carta & Domenico Depalo, 2025. "Country demographic and socio-economic structure and household consumption," Questioni di Economia e Finanza (Occasional Papers) 920, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_920_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2025-0920/QEF_920_25.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    consumption pattern; disposable income; COVID-19;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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