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Getting too old for this: Economic effects of ageing population in Finland

Author

Listed:
  • Mauri Kotamaki

    (Turku School of Economics, University of Turku, Finland)

  • Jonne Lehtimaki

    (Turku School of Economics, University of Turku, Finland)

Abstract

This paper investigates the impact of population ageing on the economic and fiscal performance of Finland, a small open economy, which has undergone a rapid and significant demographic shift since 2010. By employing the Synthetic Control Method (SCM) to create a counterfactual scenario without ageing while also controlling for a major part of structural changes in the industrial and business environments, we find that in 2019, Finland’s real GDP per capita would have been 15.9% to 27.5% higher, productivity 8.4% to 13.9% higher, and general government debt 26.0 to 28.4 percentage points lower. Our findings are further validated by an instrumental variable approach, which supports the SCM results.

Suggested Citation

  • Mauri Kotamaki & Jonne Lehtimaki, 2024. "Getting too old for this: Economic effects of ageing population in Finland," Discussion Papers 168, Aboa Centre for Economics.
    • Handle: RePEc:tkk:dpaper:dp168
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    File URL: http://ace-economics.fi/kuvat/dp168.pdf
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    More about this item

    Keywords

    Macroeconomic Policy; Macroeconomic Aspects of Public Finance; Fiscal Policy; Studies of Particular Policy Episodes; Demographic Economics;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • J1 - Labor and Demographic Economics - - Demographic Economics

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