Monday, April 23, 2012
Who Wears Short-Shorts?
Germany will face perceptible demographic challenges over the next few years. The domestic labour force will shrink and age. The April Monthly Report examines the potential impact this will have on the German economy’s potential growth. The report shows that the dampening effects of demographics can be mitigated if suitable reform steps are taken by the end of this decade, thereby essentially allowing the current growth in potential output of around 1¼% per year until 2020 to be maintained.
This is conditional on the supply of labour being stabilised by further increasing labour force participation and boosting needs-based immigration. In addition, constant productivity gains need to be achieved by up-skilling the labour force and through technical progress.
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