The impact of aging on regional employment: Linking spatial econometrics and population projections for a scenario analysis of future labor market outcomes in Nordic regions

Ageing is a key challenge for many countries. The purpose of this paper is to simulate how ageing affects future regional labour market outcomes. We develop a simulation procedure based on data for 71 Nordic regions in Finland, Norway, Sweden and Denmark. The procedure combines spatial econometrics and population projections for scenario analyses of future employment patterns up to 2021. Compared to a “benchmark scenario” based on projections of the working age population, we find that predicted regional labour market outcomes tell a much richer story if a combination of estimation results and population projections is used. To this end, our results can be helpful for economic policymaking, which is constantly in need of accurate regional labor market forecasts.