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GTAP Resource #3328

"Forecasting Demand for Labour and Skills with an AGE-model in Finland"
by Ahokas, Jussi, Juha Honkatukia and Kimmo Marttila

Coping with the effects of an ageing population is among the foremost policy challenges in most industrialised countries. It has important fiscal implications, as increasing age-related expenditure needs to be met with taxes collected from a stagnant or diminishing working-age population. It may also have major implications for the labour markets and the educational system. The present study aims at identifying the medium- and long term implications of ageing for labour demand and the demand for skills in Finland.
The study uses VATTAGE, a dynamic, applied general equilibrium model of the Finnish economy, to forecast structural changes in the Finnish economy up to the year 2025. The study is the first of its kind for a European country and is intended to provide the basis for the anticipation of medium term policy challenges by several ministries.
We base our forecast on a historical simulation of the development of the Finnish economy from the mid-1990s on. This gives us information on trends in industry-level technology parameters and commodity-level demand parameters that we utilize in our forecasting. We also link our forecast closely to commonly used Europe-wide long term forecasting exercises, notably, the work done by the EU Ageing Working Group.
On the basis of our analysis, we can identify some key challenges for the labour markets and the educational system. Our main findings are that the ageing of the Finnish population will entail a marked increase in the GDP share of health care and social service provision that affects the industry structure of the whole economy. Because of the increased demand for labour in these sectors, productivity growth especially in the service industries proves crucial for the overall development of the economy. The development of manufacturing industries is likely to be affected by labour shortages, but it is also affected by climate policies, which tend to accelerate structural change in the economy.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Not published
Date: 2010
Created: Ahokas, J. (4/15/2010)
Updated: Batta, G. (5/27/2010)
Visits: 1,856
- Domestic policy analysis
- Labor market issues
- Dynamic modeling

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