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What Is the Effect of Population Ageing in Regional Labour Market Fluctuations of Germany? A SVAR with Zero-Sign Restrictions Approach

  • Vicente Rios
  • Roberto Patuelli
Chapter
Part of the Advances in Spatial Science book series (ADVSPATIAL)

Abstract

This study analyses the effect of population ageing in the ten federal states (Länder) of West Germany during the period ranging from 1970 to 2014. To that aim, we estimate a Bayesian VAR model including wages, labour force participation rates, unemployment rates and the share of population above 65 years. Structural regional labour market shocks are identified employing a combination of zero and sign restrictions. Our findings suggest that shocks to population ageing on impact, increase the participation rate, the unemployment rate and decrease wages. However, the above effects on participation and unemployment are short-lasting and after a few periods their response is inverted. Our variance decomposition analysis reveals that the most relevant channel of impact on the economy implied by ageing is that of wages.

Notes

Acknowledgements

The research presented in this chapter is part of the project “Population Ageing and Regional Labour Market Development”, funded by the Institute for Employment Research (IAB), Germany, which the authors gratefully acknowledge. The research has also benefited from the financial support of the Spanish Ministry of Economy and Competitiveness (Project ECO2016-76681-R) and the Excellence Grants Program of the Fundación Bancaria Caja Navarra.

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of EconomicsUniversidad Pública de NavarraPamplonaSpain
  2. 2.Department of Economics, Universitá di BolognaBolognaItaly

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