Demographic change and Decarbonization — the Dual Challenge for Europe

World population growing, Europe shrinking

An aging population threatens prosperity

  • A demographically induced shortage of skilled workers increases wages and therefore costs of production for companies. The same applies if non-wage labor costs rise due to higher contributions to pension insurance and health insurance.
  • Empirical studies also show that both labor productivity and the innovative capacity of companies and economies decline as the workforce ages.

Decarbonization as a new public task

  1. It must increase its investment in low-emission infrastructure. This applies to transportation, public buildings, and much more.
  2. Because ecological transformation is a knowledge-based activity, it requires high skills, especially in the areas of technologies, information technology, natural sciences, and so on. This also requires government spending in the entire education sector and in research and development.

Options for action in the area of financing

Increasing employment

  1. Improving the compatibility of family and work. This can increase the labor force participation of women. It relates to better care options for children but also support for caring for the elderly.
  2. An improvement in people’s health because healthier people are available to the labor market for longer. This also means that the labor force participation of older people will increase, and working people will retire later.
  3. An increase in the level of education. Better educated people not only have higher productivity. They also have better opportunities in the labor market, which ensures a higher level of employment.





Our mission on this blog is to shed light on Europe’s role in the world economy.

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Global & European Dynamics

Global & European Dynamics

Our mission on this blog is to shed light on Europe’s role in the world economy.

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