Spoiler: In a previous post I argued that the lower growth of Swedish GDP per capita is a consequence of our own choice. As our incomes grew over time, we began to consume more services instead of goods. The shift in demand led to a reallocation of labour and capital from the more productive goods-producing industries to services. Thus, Services industries share of GDP has increased over time at the expense of Manufacturing industries. This led to decreasing growth rates. Furthermore, the reallocation of capital from Manufacturing to Services reinforced this decrease of growth rates. This development is a consequence of increasing prosperity.
In this post I will look at the factors making up the last four columns in Table 2 from my previous post which is reproduced below as Table 1. These showed developments of average hours worked, the employment rate, the labour force participation rate, the working age population rate. Also, these developments are consequence of our choices due to increasing prosperity.
As incomes have grown, we have chosen to work less. We have also chosen to have fewer children and smaller families. That has over time led to fewer people in the working ages supporting an increasing share of older people. It has also led to relatively fewer young people filling the ranks of the working population.
To prevent GDP per capita growth from stagnating, we need more people that work longer. But that’s not enough, we need to increase productivity growth too.
Globalisation, furry animals and anything but fishing 