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Demographic Challenges for Labour Supply and Growth

Author

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  • Sandra M. Leitner

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Robert Stehrer

    () (The Vienna Institute for International Economic Studies, wiiw)

Abstract

Many EU countries are currently undergoing major demographic changes, particularly in terms of shrinking total and working-age populations and population ageing. If this trend is to continue, the functioning of the labour market is at risk as labour shortages are increasingly more likely to emerge which will subsequently imperil further economic growth and catching-up across the EU. This report addresses the likely labour-market consequences of observable demographic trends in the EU. It applies a simple trend-based model which uses observable trends of the past 15 years of the working-age population and the activity rate – which together determine the evolution of the supply of labour – as well as of labour productivity and GDP growth – which together determine the evolution of the demand for labour – to simulate likely scenarios for the future development of labour supply and demand until 2050. Projected future trends in both labour supply and demand are then used to establish whether and – if so – in what year adverse past demographic developments are likely to kick in and begin jeopardising further growth. Different simulation exercises demonstrate that in some EU countries – particularly countries in Central and Eastern Europe – labour supply-side constraints would already materialise in the mid-2020s, which calls for quick policy action to address and ideally avert the imminent demographic collapse.

Suggested Citation

  • Sandra M. Leitner & Robert Stehrer, 2019. "Demographic Challenges for Labour Supply and Growth," wiiw Research Reports 439, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:rpaper:rr:439
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    File URL: https://wiiw.ac.at/demographic-challenges-for-labour-supply-and-growth-dlp-4868.pdf
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    1. repec:onb:oenbfi:y:2019:i:q3/19:b:3 is not listed on IDEAS

    More about this item

    Keywords

    demographic change; labour supply constraints; labour shortages; growth;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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