The Demographic Dilemma: Fertility, Female Labor Force Participation and Future Growth in Germany 2007-2060

The aim of this paper is to show possible consequences of changes in labor force participation of women and the connection between fertility and labor force participation on the future demographic and economic development in Germany. For this purpose a projection model based on micro-data covering the population development as well as the development of the labor force is computed for different scenarios, varying in the extent of changes in female participation rates. The results point to a sharp decline in size of the total population and labor force as well as on negative effects of demographic development on growth, mediated through incompatibility of fertility and participation. It is argued that this incompatibility leads to a demographic dilemma, imposing negative effects on growth either in short or in long term.