[Demography and labor shortage. Future challenges of labor market policy]

For demographic reasons, the German labor force will decrease dramatically and it will be much older on average. However, labor demand, especially for qualified workers, is expected to remain high. This paper focuses on the possibilities of expanding the labor force by increasing the participation rates of women and older persons. Herein, the change in the labor force is decomposed with respect to population and labor participation and, moreover, the effects of higher participation rates are simulated. The decomposition and simulation scenarios are based on data published by the Institute for Employment Research. The analysis clearly reveals that the effect of a considerably higher labor participation of women and older workers will disappear over time when the working-age population shrinks more and more. In addition, individuals who are currently unemployed or out of the labor force are not skilled enough. Since it seems difficult to get more qualified workers in the short and even in the medium term, improving the conditions for women and older people to take up jobs should be tackled soon. This includes investments in education and health care.