Effects of Demographic Structure in Labour Market Decompositions

Impact of demographic structure on labor market and macroeconomic aggregates might be pronounced in some countries. Despite this fact, only a handful of approaches dealing with quantifications such effects have been derived so far. The aim of this paper is therefore to fill this methodological gap and to introduce methodological approaches for capturing changes in demographic structure, with many applications in growth accounting and labor market decompositions. Firstly, a novel additive decomposition will be presented, as an alternative to traditional models using fixed population weights. This will be followed by the presentation of a multiplicative decomposition, which can be applied to all kinds of growth accounting exercises based on multiplicative identities.JEL classificationJ11; C02