Unravelling the interplay between labour productivity and reproductivity : a European perspective

Abstract

This dissertation explores the relationship between fertility rates and Labour Productivity in European countries, examining the broader implications for population growth and economic development. A cross-country, time-series analysis of 27 European Union (EU) member states over 25 years (1995-2019) is conducted, utilising data on Total Fertility Rates (TFR) and Labour Productivity. Through econometric techniques, including panel regression models, Vector Error Correction Models (VECM), and Vector Autoregressive (VAR) models, the study investigates the dynamic interplay between fertility and productivity. The findings reveal significant cross-country variation in the relationship between TFR and Labour Productivity. In the short term, past TFR positively influences current productivity in countries like Belgium, Bulgaria, Denmark, and Estonia, while having no effect in others such as Austria, Cyprus, the Czech Republic, Germany, Spain, France, Greece, Croatia, Hungary, Latvia, Luxembourg, Malta, Portugal, Romania, Slovakia, Slovenia, and Sweden. Productivity negatively impacts TFR in Austria, Denmark, Germany, and Portugal, with Sweden being the only exception showing a positive effect. Long-term results indicate that productivity positively influences TFR in Austria, Greece, and the Netherlands, Latvia, and Slovakia, while in Malta and Cyprus, productivity has a negative impact on fertility. These results highlight the complex and country-specific nature of the fertility-productivity relationship. This outcome highlights the importance of considering individual country contexts when analysing demographic and economic trends across Europe. The results contribute to the broader debate on the impact of demographic shifts on economic performance, emphasising the diverse nature of the fertility-productivity relationship.