Effects of Ageing: Potential Employment Gaps and the Possible Role of Migration

Abstract

Although age distributions differ between countries, the ageing challenge is apparent everywhere. In the coming decades, the average age will increase all over Europe. As a consequence, the ratio between the working-age population (age 15–64) and the elderly population will decline, meaning a relatively reduced supply of labour, resulting in a ‘potential employment gap’. Although different in magnitude, the ageing effect is clearly present in all countries. If the EU-25 employment rate were to remain at its present 63% the average employment level will have decreased by 30 million persons in 2050. This effect is even relevant in the short-term perspective, as the first post-war birth cohorts are exiting the labour market already. After mentioning solutions to close this potential gap, such as raising participation rates and real labour productivity, this paper will focus in more detail on the possible role of migration in labour supply. As well as being the most unpredictable, this is also the most disputed variable. As traditional migration patterns are rapidly changing at the moment, this paper does not have the intention of being conclusive and absolute. However, the labour migration debate can still be elevated to a more scientific level by tackling some common misperceptions and adding new empirical facts.