Economic Growth Rate May Be High in Spite of a Decreasing Working-age Population in Finland

  • Pekka Parkkinen
Keywords: population, employment, labor input, real incomes, Finland


This article examines the possibilities for the growth of real income in Finland in a
situation where the population is aging at a record rate. In contrast to other European
countries, no larger age groups were born in Finland after the 1940s. Therefore,
the labor force will decrease in long run, even though an abundant amount of labor
reserves still exist in Finland after the exceptionally deep economic depression
experienced in the previous decade.
Finlands real income has been calculated as the product of the labor input and
productivity per hour worked. The rate of change in productivity has been estimated
on the basis of the historical development of labor productivity. On the basis of an
analysis of labor input and productivity per hour worked, the real income of Finland
per capita could rise to one-and-a-half times what it is now in one decade and a
half, even if the working-age population decreased markedly and even if the number
of hours worked per employed person declined at the traditional rate. Increasing
immigration is not the only solution to the challenges of an aging and diminishing
working-age population. By employing domestic labor reserves and improving
productivity, reasonable economic growth rate can be achieved and at the same time
the problems caused by uncontrolled immigration can be avoided.

Jan 1, 2004
How to Cite
Parkkinen, P. (2004). Economic Growth Rate May Be High in Spite of a Decreasing Working-age Population in Finland. Finnish Yearbook of Population Research, 40, 105-117.