Potential labour supply in the regions of the Nordic countries : a method to forecast and test regional patterns of potential labour supply

Population changes are decisive for growth performances. This has been shown in a number of country studies, using time series data. The analysis is here extended in two dimensions: 1) the importance of demographics for growth is taking in to account a regional dimension allowing for spatial error structures in dynamic panel model and 2) doing the analysis in an international comparative set-up testing for the differences in effects under different national contexts. The countries considered in the paper are Nordic countries, which has the advantage of comparing rather similar countries in terms of institutional, social and legislative systems, but with quite different types of geographic structures. It therefore allows for an analysis of the importance of population change for regional growth patterns in rather similar welfare systems but for countries what vary considerably in size and geographic structures. The analysis build on harmonized data for the Nordic countries covering the period 1994-2006.