[Journal:] Zeitschrift für ArbeitsmarktForschung – Journal for Labour Market Research [ISSN:] 2510-5027 [Volume:] 42 [Year:] 2009 [Issue:] 1 [Pages:] 29-48
This paper presents projections of the medium- and long-term labor force trends in Germany. Since such projections depend highly on future political decisions and corresponding behavioral changes, we apply a scenario-based approach. Our main findings are that the future size of the labor force and actual employment will decline in the future even in the most favorable scenario. In our slightly optimistic scenario we assume a stepwise convergence of German labor force participation rates to the current Danish rates. In this case the size of the labor force will decline by around 2.8 million to approximately 39.4 million in 2040. Without any further labor market reforms, the size of the labor force will decline by more than 9 million to around 32.6 million in 2040. Regarding actual employment, the decline is more moderate in the Denmark scenario (by 2.5 million to 36.2 million in 2040) but much stronger in the Status quo scenario (by 11 million to 27.4 million in 2040). At the same time, the labor force ages rapidly. We find an increase in the share of workers aged 55 and older from around 11% today to roughly 20% in 2040.