Ostrum
  • News & Chronicles
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
  • About Philippe Waechter
Philippe Waechter's blog
  • Insights
  • About us
  • Expertise
  • Our people
  • Media

Philippe Waechter's blog
My french blog
  • News & Chronicles
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
  • About Philippe Waechter
  • News & Chronicles
  • Climate
  • France
  • Euro Area
  • United States
  • International
  • Politics & Society
  • Monetary Policy
  • Media
  • Decoding
Philippe Waechter's blog
Prévôté
Previous Next
  • 2 min

A new growth model in the Eurozone?

  • 30 May 2025
  • Philippe Waechter
  • Demographic
  • Growth
Total
0
Shares
0
0
0

A country’s growth can be broken down into three factors. The first is productivity, calculated as output per job; the second is the employment rate, the share of employment in the population; and the last is population growth. We can thus calculate the contribution of each of these elements to GDP growth. This is an exercise I conducted a few weeks ago by comparing the evolution of GDP per capita, not GDP, between the Eurozone and the United States.

This breakdown allows us to pinpoint the origins of growth. An increase in the employment rate thus has an immediately perceptible effect. This is an objective found in French economic policy. By increasing the employment rate, for a given productivity, GDP grows more rapidly.

For a given productivity rate, we can see the major role of employment and population. In these two dimensions, contributions can be shared between locals and foreigners. In the United States, migration flows from Latin America and Asia have long been major sources of explanation for higher growth than in Europe. It is in light of this observation and the new directions of migration policy that economists are questioning the maintenance of a rapid growth rate across the Atlantic.

In Europe, the role of migratory flows has historically been more limited. Their control is a political instrument of many governments.
Economists from the European Central Bank wanted to shed more light on the situation. (https://bit.ly/43lKyp0) Based on the observation of the slowdown in the rate of population growth in the major Eurozone countries and the aging of their populations, ECB economists broke down the contributions of the employment rate and the population between locals and foreign workers.

In the post-pandemic recovery and through 2024, the contribution of foreign workers to GDP growth is significant, offsetting the reduced contributions of local workers. Over the 2022/2024 period, contributions associated with foreign workers sometimes accounted for almost half of the growth in major Eurozone countries.
In the ECB study, foreign workers have gained in qualifications compared to the pre-Covid period. They therefore have the capacity to contribute more and are no longer systematically confined to low-skilled and low-paid jobs.
Contributions are strong in Spain and Germany, and somewhat less so in France. In Italy, where the rebound is significant, foreign workers make a small, almost non-existent contribution….

The European growth model is changing. Without the contribution of foreign workers to the Eurozone, income growth would have been lower, exacerbating the public debt problem.
A strong political dilemma…

Related Topics
  • Demographic
  • Growth
Subscribe to the newsletter

All the news from Philippe Waechter’s blog in your mailbox


Loading

Le magazine d’experts d’Ostrum

ABOUT OSTRUM AM
  • About us
  • Media room
  • Our publications
  • Cookie Policy (EU)
FOLLOW ME ON
EXTERNAL LINKS
  • Economists
  • Think tank
  • Central banks
  • Blog roll
©Ostrum AM 2025
An affiliate of : Plan de travail 2

Input your search keywords and press Enter.

Manage Cookie Consent
We use cookies to optimize our website and our service.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
View preferences
{title} {title} {title}