Getting too old for this: Economic effects of ageing population in Finland

Mauri Kotamäki and Jonne Lehtimäki

No 168, Discussion Papers from Aboa Centre for Economics

Abstract: This paper investigates the impact of population ageing on the economic and fiscal performance of Finland, a small open economy, which has undergone a rapid and significant demographic shift since 2010. By employing the Synthetic Control Method (SCM) to create a counterfactual scenario without ageing while also controlling for a major part of structural changes in the industrial and business environments, we find that in 2019, Finland’s real GDP per capita would have been 15.9% to 27.5% higher, productivity 8.4% to 13.9% higher, and general government debt 26.0 to 28.4 percentage points lower. Our findings are further validated by an instrumental variable approach, which supports the SCM results.

Keywords: Macroeconomic Policy; Macroeconomic Aspects of Public Finance; Fiscal Policy; Studies of Particular Policy Episodes; Demographic Economics (search for similar items in EconPapers)
JEL-codes: E6 E61 E62 E65 J1 (search for similar items in EconPapers)
Pages: 40
Date: 2024-11
New Economics Papers: this item is included in nep-age and nep-lab
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