Volume 36 - Article 40 | Pages 1185–1208  

Changes in economic activity: The role of age and education

By Elke Loichinger, Alexia Prskawetz

Abstract

Background: Between 2000 and 2010, the labor force participation (LFP) of European men stayed mostly constant, whereas the participation of women continued to increase. Participation rates of people close to normal retirement ages rose almost universally. At the same time, the education composition shifted toward higher levels of educational attainment and education-specific differentials in economic activity persisted.

Objective: The aim of the paper is to understand the extent to which developments of LFP rates between 2000 and 2010 in selected European countries can be explained by age-specific and education-specific changes in participation rates, as compared to changes in populations’ structural composition by age and education.

Methods: We apply a decomposition methodology that allows us to disentangle changes in age- and education-specific LFP rates from changes in the age and educational structure of the population.

Results: Our results show that LFP rates of adult women would have increased even more, had it not been for the downward pressure from the shift in the age composition toward older age groups with relatively lower levels of participation. This downward pressure also depressed male participation. The increase in participation among older people is mainly explained by participation increases among those with nontertiary education and is reinforced by a general shift toward higher levels of educational attainment.

Contribution: Beyond changes in the age structure, we quantify the role of compositional changes by educational attainment. Our results indicate that labor supply may not decrease to the extent expected due to population aging, given educational expansion and education-specific patterns of economic activity.

Author’s Affiliation

• Elke Loichinger - Statistisches Bundesamt, Germany EMAIL
• Alexia Prskawetz - Wittgenstein Centre for Demography and Global Human Capital (IIASA, OeAW, University of Vienna), Austria EMAIL

Other articles by the same author/authors in Demographic Research

Fertility decline, changes in age structure, and the potential for demographic dividends: A global analysis
Volume 50 - Article 9

How many old people have ever lived?
Volume 36 - Article 54

Labor force projections up to 2053 for 26 EU countries, by age, sex, and highest level of educational attainment
Volume 32 - Article 15

Economic support ratios and the demographic dividend in Europe
Volume 30 - Article 34

Family policies in the context of low fertility and social structure
Volume 29 - Article 37

The reproductive value as part of the shadow price of population
Volume 24 - Article 28

Does fertility decrease household consumption?: An analysis of poverty dynamics and fertility in Indonesia
Volume 20 - Article 26

Austria: Persistent low fertility since the mid-1980s
Volume 19 - Article 12

The "Wedding-Ring": An agent-based marriage model based on social interaction
Volume 17 - Article 3

Decomposing the change in labour force indicators over time
Volume 13 - Article 7

Pathways to stepfamily formation in Europe: Results from the FFS
Volume 8 - Article 5

Fertility in second unions in Austria: Findings from the Austrian FFS
Volume 3 - Article 2

Most recent similar articles in Demographic Research

Examining the relationships between education, coresidential unions, and the fertility gap by simulating the reproductive life courses of Dutch women
Volume 52 - Article 24    | Keywords: contraception, education, fertility, GGS, life course, LISS, microsimulation, Netherlands, physiology, unions

Uncovering the underlying causes for the narrowing, stalling, and widening Black–White mortality gap from 2000 to 2022 in the United States
Volume 52 - Article 18    | Keywords: cause of death, decomposition, mortality trends, racial disparities, United States of America, years of life lost (YLL)

Demographic convergence in marriage timing: Intersecting gender and educational expansion
Volume 52 - Article 14    | Keywords: age at marriage, convergence, cross-country, education, gender, union formation

Left behind single in the partnering market? Entry into cohabiting unions by women and men with low educational attainment across regions of Europe, cohorts 1960 to 1985
Volume 51 - Article 43    | Keywords: cohabitation, education, Europe, European Social Survey, event history analysis, logistic regression, marginalization, partner selection, singlehood, union formation

Is single parenthood increasingly an experience of less-educated mothers? A European comparison over five decades
Volume 51 - Article 34    | Keywords: age, children, cross-national comparison, education, Europe, family life course, inequality, single motherhood