Population ageing, labour productivity and economic welfare in the European Union

Mirela Cristea,Graţiela Georgiana Noja,Daniela Emanuela Dănăcică,Petru Ştefea

doi:10.1080/1331677x.2020.1748507

Abstract

This paper examines the impact of the ageing dimensions and other economic and social variables on labour productivity and poverty risk within the European Union (EU). Taking into account the sizable dissimilarities among the EU Member States, our research is configured on four specific panels, according to the UNECE/European Commission mapping of EU countries, based on the Active Ageing Index data and methodology for 2018. We have compiled a complex dataset with official data to measure the ageing features, labour market dimensions and poverty, along with other economic and social representative variables, during 1995-2017. The methodological endeavour is critical and analytical, grounded on an extensive quantitative research. Two multifactorial macro-econometric models are applied in order to evaluate the direct implications of the ageing dimensions and other utter credentials on labour productivity, respectively on poverty levels. Structural equation modelling further entails an integrative examination of the total, indirect and bidirectional connections between the ageing phenomenon, several socio-economic indicators and the labour market performance, with a final impact on poverty. Results show different yet extremely significant labour market and poverty impacts for the ageing representative groups of EU countries, which require specific policy interventions and tailored strategies.

Highlights

In the last decades, population ageing has received a special attention from researchers who render global its importance owing to the magnitude of the effects induced by this phenomenon on affected economies and especially on the labour markets (Prskawetz et al, 2005), capital markets (Bo€rsch-Supan, 2005), pension systems (Cristea & Mitrica, 2016), health and social security (Cristea et al, 2020; P^anzaru, 2015; Sharpe, 2011).Due to the major medical breakthroughs, life expectancy has rapidly risen over recent years, triggering a strain on social security systems
As a new innovation brought by this paper in order to cope with the significant dissimilarities accounted among the European Union (EU) Member States (MS) in terms of the ageing population, the research endeavour is rendered on four groups of EU MS, as mapped by United Nations Economic Commission for Europe (UNECE)/European Commission (2019), based on the Active Ageing Index (AAI). These four panels of EU countries are clustered according to the untapped potential of older people for active and healthy ageing, as follows: (i) below the EU average score, comprising ten countries, mostly Central and East European (CEE) states; (ii) medium ranks above the EU average, enclosing six MS; (iii) upper medium values over the EU average, with seven MS; (iv) and the highest values, including five developed EU countries
We summarize that: there are various approaches regarding the economic and social consequences of population ageing, upon the labour market performance; fewer studies have investigated the distinct groups of countries within the EU; the main findings on the interlinkages between the ageing dimensions and labour market outcomes suggested that there are unfavourable consequences on the long term if the skills of the workforce aged 5564 years would not be correlated with suitable jobs for them; essential predictors to be comprised by policies and strategies for older working group (55-64 years) as recommended by several authors were towards education and lifelong learning, innovation support, higher health expenditures along with supportive health services and poverty reduction

Summary

Introduction

Population ageing has received a special attention from researchers who render global its importance owing to the magnitude of the effects induced by this phenomenon on affected economies and especially on the labour markets (Prskawetz et al, 2005), capital markets (Bo€rsch-Supan, 2005), pension systems (Cristea & Mitrica, 2016), health and social security (Cristea et al, 2020; P^anzaru, 2015; Sharpe, 2011).Due to the major medical breakthroughs, life expectancy has rapidly risen over recent years, triggering a strain on social security systems. Within the European Union (EU), in 2018, almost 98 million people are aged 65 years and above, which accounts for some 19.2 per cent of the total population, according to the United Nations Economic Commission for Europe (UNECE)/European Commission (2019). As this share is expected to significantly rise over the decades, ensuring active and healthy ageing becomes crucial to ensure a sustainable economic development. This means different effects on countries and inequalities that need to be managed wisely

Objectives

Results

Conclusion