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The Automatisation Challenge Meets the Demographic Challenge: In Need of Higher Productivity Growth

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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

The future of employment and labour demand growth in the dawning era of intelligent robots and other new technologies is heavily debated. This paper argues that this discussion needs to be complemented by a second trend which has been unfolding in Europe for some time, namely the demographic decline. Various demographic scenarios for many EU countries point towards a significant decline in the working-age population in the near future which puts the functioning of labour markets at risk as labour shortages become increasingly more likely and subsequently threaten economic growth. In this context, this paper gives an overview of recent trends in the growth of real value added, labour productivity and employment as well as of demographic scenarios. Based on these trends, the hypothetical increase of labour productivity growth which would be required to keep real GDP growth at its current level, despite the projected reduction in the workforce, is calculated. Results show that the hypothetical labour productivity growth rate required is about one percentage point higher than the actual growth rate, suggesting that the current labour productivity growth rate in the EU needs to more than double. A complementary econometric analysis shows that even though robots exhibit a positive impact on labour productivity growth, this is not (yet) strong enough to close the gap between the recent and the hypothetical labour productivity trend growth rate which would be required. Disclaimer The paper has been written as part of the DG ECFIN FELLOWSHIP-INITIATIVE 2018-2019 The productivity challenge jobs and incomes in the dawning era of intelligent robots, Ref. 2018 ECFIN 005/B and can also be downloaded from the European Commission's website.

Suggested Citation

  • Sandra M. Leitner & Robert Stehrer, 2019. "The Automatisation Challenge Meets the Demographic Challenge: In Need of Higher Productivity Growth," wiiw Working Papers 171, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:wpaper:171
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    References listed on IDEAS

    as
    1. Richard Grieveson & Sandra M. Leitner & Robert Stehrer, 2019. "EU Faces a Tough Demographic Reckoning," wiiw Policy Notes 30, The Vienna Institute for International Economic Studies, wiiw.
    2. Prettner, Klaus, 2019. "A Note On The Implications Of Automation For Economic Growth And The Labor Share," Macroeconomic Dynamics, Cambridge University Press, vol. 23(3), pages 1294-1301, April.
    3. 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.
    4. Prettner Klaus & Geiger Niels & Schwarzer Johannes A., 2018. "Die Auswirkungen der Automatisierung auf Wachstum, Beschäftigung und Ungleichheit," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 19(2), pages 59-77, July.
    5. Thor Berger & Carl Benedikt Frey, 2016. "Structural Transformation in the OECD: Digitalisation, Deindustrialisation and the Future of Work," OECD Social, Employment and Migration Working Papers 193, OECD Publishing.
    6. Ljubica Nedelkoska & Glenda Quintini, 2018. "Automation, skills use and training," OECD Social, Employment and Migration Working Papers 202, OECD Publishing.
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    Cited by:

    1. Robert Stehrer, 2020. "Konvergenz, Produktionsintegration und Spezialisierung in Europa seit 1995," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/20, pages 49-59.

    More about this item

    Keywords

    robotisation; ICT capital; productivity; demography;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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