Impact of Population Ageing on Unemployment and Entrepreneurial activity: the Case of Slovenia

Abstract

Purpose: The purpose of the research is to investigate impact of population ageing on unemployment and entrepreneurial activity in Slovenia since it is one of the topical issues in an ageing Europe and has many implications for economic and non-economic welfare. Design and Methodology: First, we introduce the phenomenon of population ageing and provide some literature review on population ageing impact on unemployment and entrepreneurial activity. Second, we employ multiple regression analysis on cross-section data for Slovenian municipalities. We use secondary data collected from databases of Statistical Office of Republic of Slovenia and Employment Service of Slovenia on demographic and economic variables by 210 municipalities for the year 2009. Results: The regression analysis results confirm our first hypothesis. Municipalities with higher ageing index and higher average age also have higher registered unemployment rate. If ageing index (average age) is higher by 1 %, the registered unemployment rate is higher on average by 0.532 % to 0.670 % (by 2.431 % to 3.379 %), ceteris paribus. Our regression analysis also confirms our second hypothesis. Municipalities with higher average age also have lower number of enterprises per 100 population. If average age is higher by 1% (by 1 year), the number of enterprises per 100 population is lower on average by 1.7 % (by 0.182 enterprises), ceteris paribus. Conclusion: We may conclude that population ageing without properly addressing it, consequently leads into lower economic welfare. That additionally highlights the importance of a proper demographic and social policy when governing labour market policy.