The relationship between demographic change and economic growth in the EU

Over the last few years there has been an increasing awareness of a direct influence of population age structure on the macroeconomy and in particular on economic growth. In this talk we provide a review of the recent literature that links changes in the demographic structure to economic growth and introduce three new empirical growth regressions for the EU-15 countries over the last decades (1950‑2005). Our results indicate a positive impact of the age group 50-64 on economic growth. Moreover, a high proportion of people in the age group 15-29 facilitates technology absorption. Since we identify demographic age structure as an important and robust determinant (with respect to the inclusion of various economic variables) of past economic growth rates it is straightforward to include demographic forecasts when projecting economic growth rates. Compared to forecasts of economic and social indicators (that also determine past economic growth rates), the age structure is relatively easy to forecast during the next two to three decades. We therefore choose one of our empirical estimations to conduct a prospective analysis of the future implications of demographic change on economic growth for the EU‑25 countries up to 2050.