Thomas Url1, Rob J Hyndman2, Alexander Dokumentov2
- Vienna University of Economics and Business, Vienna, Austria
- Monash Business School, Monash University, Clayton, Victoria, Australia
Abstract: Many countries have implemented social programs providing long-term financial or in-kind entitlements. These programs often focus on specific age-groups and consequently their expenditure streams are subject to demographic change. Given the strains already existing on public budgets, long-term forecasts are an increasingly important instrument to monitor the budgetary consequences of social programs. The expected development of the labour force is a key input to these forecasts. We suggest combining a functional data approach to age-profiles of labour market participation rates with information on education, marital status and other exogenous variables to improve long-term forecasts of labour supply.