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Published: 2011

A global view on demographic pressure and labour market participation

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Demographic change across the globe puts pressure on labour markets and public finances. Most studies on ageing focus on the projected development of the old age dependency ratio - the ratio of persons 65 or older relative to the working age population. This ratio gives an incomplete picture of fiscal pressure from demographic changes. Here, the authors include the share of the working age population that is not active on the labour market, labelled as labour market space. They conclude that Poland, Turkey and Greece are most under pressure. Developing countries, such as Uganda, the Democratic Republic of Congo and Tanzania will experience a very low pressure up to 2050. In countries under high pressure there is room for using labour market space by working more hours or increasing the retirement age, as this will alleviate fiscal pressure, suggesting a policy trade-off between maintaining publicly financed services to the dependent population and maintaining labour market space.
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L. Groot

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