Europe: gray hair and low growth

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Abstract:

PurposeThis paper aims to explore the links between demographics and economics and to show how European institutions (like the European Commission) and European policies are slowly but surely taking into account these fundamental relations. Design/methodology/approachThe paper demonstrates the bases of the productivity gap between Europe, especially France, and the USA, by comparing GDP per active worker adjusted with the employment rate. In order to compare the level of wealth, the paper suggests using potential GDP per capita, taking into account the labor effort measured by the number of hours worked. FindingsThere can be no sustainable development without children. In comparison with the USA, Europe has a demographic deficit that is probably greater than any technology gap. All of Europe has discovered that there can be no growth without cradles and that gray hair will probably lead to soft growth. Given that the active population of the Europe of 25 will decrease by more than 20 million people between 2010 and 2030, increased immigration and successful integration of newcomers through more flexible public and family policies are needed. Originality/valueThis paper constitutes an appeal for more research about the links between demographics and economic growth, especially about the existence of a "demographic multiplier", considering that development is the result of investment not only in technologies, but also in human capital.

Keywords: Demographics; Economics; Europe; Productivity rate

Document Type: Research Article

DOI: http://dx.doi.org/10.1108/14636680610656156

Publication date: March 1, 2006

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