Subreport 3: Population Ageing and Regional Competitiveness

For an assessment of the economic effects of population ageing it is of central importance to identify how demographic change impacts on the overall economy. Specifically, effects can be expected to act on demand and productivity, which in turn affect national and regional competitiveness. In a first step, the study shows that the link between demographic change and productivity is of a reversed U-shape for the Austrian Länder. Compared to the 35 to 44 year age cohort younger and older workers show a productivity deficit. An increasingly ageing population should (with the exception of Vienna) result in productivity losses up to 2030. Private demand for consumption is determined in its level and structure by the age of the head of household. Consequent to population ageing, the savings rate should thus rise up to 2030. Moreover, spending on consumption categories such as housing, heating and lighting, food and non-alcoholic beverages and health care products will rise while spending on transport should decline. Estimated through the multiregional econometric input-output model MultiREG, the overall economic effects of demographic ageing are very low: productivity change does not affect gross value added but does slightly increase the employment level. Altogether, structural changes in private consumption have a minor positive effect on gross value added and employment, while those in public consumption (an increase in health care spending) have some negative impact. Regional differences are the result chiefly of effects on private consumption since Vienna will suffer losses due to assumed reductions in public administration.