Workforce Ageing and the Substitution of Labour: The Role of Supply and Demand of Labour in Austria

Abstract

We study the sensitivity of projected economic productivity (output per worker) with respect to alternative projections of labour supply and alternative assumptions on the substitutability of workers at different ages. We show that in a pure labour economy assuming imperfect substitution of workers at different ages implies an increase in relative productivity during the next two decades. For a decreasing or hump-shaped age-specific productivity profile a negative tradeoff between an increasing labour force at older ages and aggregate productivity results. A decline in productivity can be attenuated by adjusting labour force participation rates to levels currently observed in Nordic countries.

Labor force projections up to 2053 for 26 EU countries, by age, sex, and highest level of educational attainment

“…With the present projections of human-capital-specific labor supply, it is possible to calculate future economic growth scenarios including differentials in productivity due to differing levels of human capital and compare these results with calculations that are done without the human capital dimension (Prskawetz, Fent, and Guest 2008). …”

Who's Afraid of Population Decline? A Critical Examination of Its Consequences

“…Productivity analysis in Japan also suggests no cause for concern from an aging workforce accustomed to working late into life (Clark et al 2008). Furthermore, workforce aging shifts the age distribution of workforces closer to the optimal, even generating a productivity dividend, according to an international analysis (Prskawetz, Fent, and Guest 2008). without population pressure, technical capacity is claimed to fall to a more extensive, less specialized level (Boserup 2003).…”

Depopulation as an opportunity, not a threat to cities and regions: a paradigm change

“…Were it not for the influx of external migrants, the decline would reach 28% (65 million people) while the total population of the region in question would fall by about 16% (Bijak et al 2005). This deficit can be reversed through efforts to make better use of the potential of the current workforce or by falling back on the unemployed, particularly those who are in the working age but do not have a job (Grant 2001;Prskawetz & Fent 2004). Within the EU member states there are considerable labor force reserves of the unemployed and the passive workforce whose reasons for inactivity is neither age nor health, but rather national policies.…”