Employment and growth in an aging society: a simulation study for Austria
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In this study we use a long run macroeconomic model for Austria to simulate the effects of aging on employment, output growth, and the solvency of the social security system. By disaggregating the population into six age cohorts and modelling sex specific participation rates for each cohort we are able to account for the future demographic trends. Apart from a baseline scenario, we perform three alternative simulations that highlight the effects of aging from different perspectives. These include (1) purely demographic developments, (2) increasing labour market imperfections, and (3) higher economic growth due to a productivity shock.
KeywordsEconomic growth Aging Austria
JEL ClassificationC6 E2 O4
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All authors would like to thank Werner Roeger, Stephen Hall, Arjan Lejour, Bert Smid, Johann Stefanits, Andreas Wörgötter, Paul Kellermann, Peter Part, and the participants of two modelling workshops hosted by the Institute of Advances Studies (IHS) in Vienna as well as the annual NOEG meeting in Vienna and the ECOMOD conference in Paris 2004 for helpful comments and suggestions. We are particularly indebted to Fritz Breuss and Robert Kunst for valuable discussions during the project. The responsibility for all remaining errors remains entirely with us.
The development of A-LMM has been funded by a research grant from the Austrian Federal Ministry of Social Security, Generations and Consumer Protection (Grant GZ:21.101/74–8/02). This financial support is gratefully acknowledged.
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