A recent paper by UNTANGLED researchers shows that Europe’s ageing population is hampering growth. Despite the growing share of older workers, adoption of automation is not accelerating and may even be slowing down.
With a median age of 44.1, Europe is now the region with the oldest population in the world. Between 1995 and 2021 the share of people aged 50-64 rose substantially in the majority of the EU’s 27 member states, with the highest increases registered in Austria, Belgium, Italy, the Netherlands, Poland and Spain. Europe will be challenged further by demographic changes over the next few decades, even under favourable assumptions about fertility and migration, and the economic effects are not yet fully understood.
In a new study, economists Robert Stehrer and Maryna Tverdostup from the Vienna Institute for International Economic Studies (wiiw) looked at how an ageing population affects the growth and automation of the economy in the EU27.
“On the one hand, there is the theory that a demographic time bomb is ticking in Europe, leading to a period of slow growth,” says Tverdostup. “On the other hand, there are also a number of studies which show that countries with a more rapidly ageing population grow faster and invest more in automation. We wanted to check which of these is true for the EU.”
In their key findings the authors conclude that the relationship between population ageing and annual economic growth, measured by growth in GDP as well as GDP per capita, shows a weak negative correlation.
“This means that the ageing of the population in the EU could contribute to weaker growth,” says Stehrer, pointing out that a similar negative relationship between the ageing of the labour force and economic growth has been found in several US states.
Robotisation depends on development, not ageing
While many propose the introduction of new technologies as a solution to the “silver tsunami” of ageing societies, the researchers found no significant link between robotisation and ageing.
“Our results suggest that the level of robotisation is largely dependent on the level of economic development and other absorptive capacities,” says Stehrer.
The study was conducted as part of the EU-funded UNTANGLED project, which aims to examine how the three megatrends of globalisation, technological change and demographic change affect labour markets in the EU and beyond. The authors investigated the effect of an ageing population on economic growth, investment in information and communication technologies, software, databases and robotisation in the 27 EU member states. They analysed national data, Eurostat figures on the capital stock by asset types, the EU Labour Force Survey and data from the International Federation of Robotics (IFR).
Robert Stehrer, Maryna Tverdostup (2022). Demography, capital accumulation and growth (Deliverable 3.2) Leuven: UNTANGLED Project 1001004776 – H2020.
The paper, is available to download here