The EU Growth Strategy and the Impact of Aging

The paper looks at the main challenges to raise potential growth in the EU. It examines recent progress made regarding the structural reform efforts in EU product, labor, and financial markets, and it attempts to assess their impact on overall macroeconomic performance in terms of output and (un-)employment. The paper then proceeds to analyze the likely consequences of population aging for the growth rate of potential output and per capita incomes, emphasizing the fairly dramatic economic and budgetary implications of the decline in the EU's working-age population if governments do not take offsetting policy actions. Copyright Blackwell Publishing Ltd 2004.