Aging and regional productivity growth in Germany

Alterung und regionales Produktivitätswachstum in Deutschland

Eckhardt Bode, Dirk Dohse and Ulrich Stolzenburg ()
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Ulrich Stolzenburg: Kiel Institute for the World Economy

Review of Regional Research: Jahrbuch für Regionalwissenschaft, 2023, vol. 43, issue 3, No 4, 409-432

Abstract: Abstract We investigate the effects of aging on regional productivity growth, the mechanisms and the strength of which are not well-understood. We focus on two different manifestations of population aging—workforce aging and an increasing share of retirees—and investigate channels through which aging may impact on regional productivity growth for a panel of German counties 2000–2019. We find that workforce aging is more negatively associated with productivity growth in urban than in nonurban regions. A likely reason is that aging is detrimental to innovative and knowledge-intensive activities, which are heavily concentrated in cities. We also find a negative association between the share of the retired population and productivity growth in regions with a small household services sector. A likely reason is that older people’s disproportionate demand for local household services (including health care, recreation) requires a re-allocation of resources from more productive manufacturing or business services to less productive household services. Regions specialized more in highly productive industries have more to lose in this process.

Keywords: Workforce aging; Population aging; Productivity growth; Regional analysis; Germany (search for similar items in EconPapers)
JEL-codes: E24 J11 J24 J26 R11 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10037-023-00188-3

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