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

32 Pages Posted: 9 Feb 2007

See all articles by Alexia Prskawetz

Alexia Prskawetz

Austrian Academy of Sciences - Vienna Institute of Demography

Thomas Fent

Austrian Academy of Sciences - Vienna Institute of Demography

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.

Suggested Citation

Fürnkranz-Prskawetz, Alexia and Fent, Thomas, Workforce Ageing and the Substitution of Labour: The Role of Supply and Demand of Labour in Austria. Metroeconomica, Vol. 58, No. 1, pp. 95-126, February 2007, Available at SSRN: https://ssrn.com/abstract=962211 or http://dx.doi.org/10.1111/j.1467-999X.2007.00262.x

Alexia Fürnkranz-Prskawetz

Austrian Academy of Sciences - Vienna Institute of Demography ( email )

Prinz Eugenstr. 8-10
Vienna, 1040
Austria

Thomas Fent (Contact Author)

Austrian Academy of Sciences - Vienna Institute of Demography ( email )

Prinz Eugenstr. 8-10
Vienna, 1040
Austria

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