Effects of population ageing on employment in Italy

Abstract

Over the last 15 years, the Italian labour market has gone through deep
changes resulting from both economic dynamics and changes in the composition of
the population, which have had a crucial impact on the number of employed
persons. In the economic sphere, starting from 2007, we first witnessed the biggest
economic crisis since the post-war period, then a slow recovery associated with
labour policies and pension reforms, finally a new collapse occurred during the
COVID-19 pandemic and the subsequent post-pandemic recovery. Over the same
period, the age structure of the Italian population has changed deeply, due to
incoming migration flows but more significantly due to the well-known ageing
process. Recent structural changes in the population between 15 and 64 years have
led to a decrease in the size of the age groups with higher employment rates (35-49
years old) and to a growth of older ones, historically characterized by less
involvement in the labour market. Therefore, it is crucial to be able to study
employment trends net of the ageing effects. The data deriving from the Labour
Force Survey allow analysis of employment with respect to the main socio
economic characteristics of individuals; in particular, the recent reconstructions
produced by Istat make available comparable time series of data from 2004
onwards, adjusted for all the changes that occurred in the survey. The aim of this
paper is to investigate the evolution of employment over the last 15 years, using
techniques to standardise the age structure of the population. In particular, to assess
the year-on-year and the five-year variations of employed persons in the main age
groups, the effect deriving from the demographic component is analysed separately
from that due to the ‘employment performance’, related to the observed variation
in employment rates. The findings demonstrate that for some instances, changes in
population demographics concealed the actual job market patterns, as in the case of
people aged 35-49, while in other cases, such as for over-50s, demographic
dynamics amplified the employment trend related to economic factors alone.