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The Impact of Workforce Aging on European Productivity

Shekhar Aiyar () and Christian H Ebeke

No 16/238, IMF Working Papers from International Monetary Fund

Abstract: The age-distribution of Europe’s workforce has shifted towards older workers over the past few decades, a process expected to accelerate in the years ahead.. This paper studies the effect of the aging of the workforce on labor productivity, identifies the main transmission channels, and examines what policies might mitigate the effects of aging. We find that workforce aging reduces growth in labor productivity, mainly through its negative effect on TFP growth. Projected workforce aging could reduce TFP growth by an average of 0.2 percentage points every year over the next two decades. A variety of policies could ameliorate this effect.

Keywords: Aging; Euro Area; Economic growth; Production; Demographic transition; Labor force participation; Total factor productivity; Workforce Aging; Productivity; Policies, Workforce Aging, Productivity, Policies, General (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-eec
Date: 2016-12-08
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