The Impact of Workforce Aging on European Productivity

ByShekhar Aiyar, Christian H Ebeke

December 8, 2016

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Aging, Labor, Labor force, Population and demographics, Production, Productivity, Total factor productivity

Keywords: age group, Aging, aging workforce, effect of workforce, Europe, growth, Labor force, labor market, Policies, Productivity, Total factor productivity, workforce, Workforce Aging, workforce share, workforce skill, workforce training, WP

Pages:
29
Volume:
2016
DOI:
https://doi.org/10.5089/9781475559729.001
Issue:
238
Series:
Working Paper No. 2016/238
Stock No:
WPIEA2016238
ISBN:
9781475559729
ISSN:
1018-5941

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