NEUJOBS - Employment 2025

How will multiple transitions affect the European labor market?

Client: European Commission (7th EU Research Framework Programme); Brussels

Project partners: Centre for European Policies Studies (leader), University of Birmingham, Economic and Social Research Institute, Institut Syndical Europeen, Institute for Advanced Studies, London School of Economic and Political Science, University of Mannheim and other project partners.

Duration: 01.02.2011 - 31.01.2015

Demographic changes and technological progress will lead to structural changes in European labor markets. As part of a larger project and on behalf of the European Commission the IZA study analyzes future demographically induced developments in European labor markets, taking into account fiscal and distributional consequences. On the basis of demographic projections, current microdata, and an IZA simulation model the report shows that the labor force potential would decline by up to 8.7% by 2030, unless specific conditions were altered. Such a decline in the labor supply could lead to substantial wage increases, which in turn should cause a convergence of income inequality in Europe. At the same time, a smaller labor force would increase the fiscal burden, which should be counteracted by appropriate policy measures. This underscores the potential of a moderate increase in the retirement age.