Europe’s Coming Demographic Challenge: Unlocking the Value of Health examines the region’s demographic challenges, the curious new phenomenon of the “underworked European,” and policies that stand in the way of the region benefiting from its health advantage.

In the past generation, Western Europe has fallen ever further behind the United States in our long-term transatlantic economic competition. Between 1980 and 2005, America’s total growth in gross domestic product (GDP) outpaced OECD Europe’s by an average of 0.8 percent per year. For the period after 1995, America’s annual tempo of economic growth exceeded Germany’s—Europe’s largest economy—by more than one percentage point a year, both in the aggregate and in per-capita terms.

Many factors have contributed to this widening gap and to the underlying gradual economic deceleration in Europe, which lies at the heart of the divide. The role of social and economic policies, for example, can hardly be ignored. But demographic trends also have had a major influence on the disparate American and European economic records over the past quarter-century. And the demographic divergence between Europe and America stands to be even more striking over the coming quarter-century.

If Europeans hope to remain economically competitive in the years ahead—or, perhaps more importantly, if they wish to enjoy continuing improvements in living standards and economic well-being—they must face these new demographic realities squarely, capitalizing upon thus-far ignored opportunities where they can, compensating for adverse population changes where they must.

Contrary to what some alarmed voices have been proclaiming in recent years, we maintain that the economic implications of Europe’s demographic outlook over the next generation are by no means unremittingly bleak, despite the obvious challenges they pose. For there are positive as well as negative demographic trends at work in Europe today, shaping the region’s future. Most importantly on the positive side of the ledger, Europe appears extremely well-positioned to take advantage of the “healthy aging” of its population, as its workers exhibit great potential to remain productive at advanced ages—perhaps even greater potential, indeed, than their American counterparts.

Capitalizing upon the promise in Europe’s impending demographic shifts, however, will require important—indeed, fundamental— changes, both in the way people think and in the ways they choose to live.

About the Authors

Nicholas Eberstadt is the Henry Wendt Scholar in Political Economy at the American Enterprise Institute (AEI), and is senior adviser to the National Bureau of Asian Research (NBR). He has served on the Board of Scientific Counselors for the U.S. National Center for Health Statistics, and is currently a member of the President’s Council on Bioethics. Mr. Eberstadt’s previous books on health and demographic issues include Fertility Decline in the Less Developed Countries (editor, 1981), The Tyranny of Numbers (1995), Prosperous Paupers and Other Population Problems (2000), and Health and the Income Inequality Hypothesis (coauthor, 2004). Mr. Eberstadt earned his AB, MPA, and PhD from Harvard University, and his MSc from the London School of Economics.

Hans Groth, MD, is a member of the Board of Directors of Pfizer Switzerland. He holds an MD from the Universities of Marburg (Germany) and Zurich (Switzerland) and an MBA from Henley Management College (England), and he has eighteen years of extensive industry experience in numerous European and overseas markets.

In 2003, in his capacity as a Pfizer Global Health Fellow, he conducted HIV/AIDS epidemiological field research in Siberia and Central Asia on behalf of UNAIDS. Since then, he has been personally committed to supporting HIV harm-reduction projects in the Lake Baikal region of Siberia. Inspired by these experiences, Dr. Groth has developed a deep interest in the “health-wealth relationship” in light of global demographic changes and their implications for the economic, social, and political agendas, which need to be addressed by all nations.

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Europe’s Coming Demographic Challenge: Unlocking the Value of Health
Nicholas Eberstadt and Hans Groth
The AEI Press, 2007

Contents:
LIST OF ILLUSTRATIONS vii
ACKNOWLEDGMENTS ix
1. THE DEMOGRAPHIC CHALLENGE TO EUROPEAN PROSPERITY 1
2. U.S.-EUROPEAN DEMOGRAPHIC DIVERGENCE: THE SHAPE OF THINGS TO COME 3
3. EUROPE’S LIMITED DEMOGRAPHIC OPTIONS 9
4. HEALTHY AGING: AN ECONOMIC TRUMP CARD? 20
5. ENHANCING PROSPERITY THROUGH HEALTHY AGING 29
6. EUROPE’S ONGOING RETREAT FROM THE WORKPLACE 32
7. UNLOCKING THE VALUE OF HEALTH THROUGH NEW POLICY:
LABOR MARKETS, EDUCATION, AND HEALTH CARE 41
Labor Markets 43
Education 45
Health-Care Policy 46
CONCLUDING REMARKS 49
NOTES 51
REFERENCES 65
ABOUT THE AUTHORS 71

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Acknowledgments:

This publication was made possible by a grant from the German Marshall Fund of the United States (GMFUS). The authors would like to thank GMFUS for this generosity. In addition, Nicholas Eberstadt would like to offer grateful acknowledgment of Pfizer’s longstanding support for his research in demography, health, and development.

Earlier versions of this study were presented to workshops at Baur au Lac in Zurich; at the Berlin Insitit für Bevölkerung und Entwicklung (BIBE) in Berlin; and at Instituto Bruno Leoni (IBL) in Milan. This monograph is the better for the many suggestions and constructive criticisms offered at those sessions. In particular, the authors would like to recognize professors Kurt Schildknecht and Peter Zweifel for their insightful suggestions and valuable comments on an earlier draft of this essay.

Thanks are also due to Mr. Mark Keese of the Organisation for Economic Co-operation and Development (OECD) for generously providing unpublished data for our use. Finally, we would like to salute Ms. Megan Davy of the American Enterprise Institute for her invaluable research assistance. The opinions expressed here, and any remaining errors, are the authors’ alone

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