With a panel data study, this paper examines whether similar trends are observable in Europe, too. The result: There is a statistically significant and positive correlation between the share of workers aged 40 to 49 and labor productivity. For Europe as a whole, a higher share of workers in their 30s and their 40s increases productivity growth by 16pp and 17pp, respectively, if we isolate the effect of aging.

As a result, differing demographic trends could widen the gap between rich and poor countries in Europe. The demographic “winners” include Northern countries such as Germany, where the share of 40-somethings – today’s millennials – in the workforce is set to increase as the baby boomers retire. Denmark, Belgium, the Netherlands and the UK will see a similar trend. On the other hand, demographic headwinds could bring the productivity boom in Eastern Europe to an end, and Southern Europe, including Spain and Italy, could also see hindered productivity growth.