Bertelsmann Stiftung (ed.)

Prof. Giordano Mion, Dr. Dominic Ponattu

The Single Market, welfare and population size – an analysis of EU countries and regions

Policy Brief

  • 2019, 10 pp (PDF)
  • Free of charge

In theory, however, the SM would also, albeit indirectly, affect another quantity that fosters economic growth, but is often neglected when studying gains from EU integration: population size. The growth accounting technique in economics separates economic growth into the three components of capital, productivity and labor – where the latter would be positively affected by population growth. Thus, the income gains from the SM make the set of participating countries more attractive as a place to live as compared to countries outside the SM. Therefore, more people from the rest of the world would choose to live and work in Europe and its population grows. Population growth, in turn, adds to economic growth and can thus exhibit an indirect or “second round” effect on economic growth. It is thus important to understand not just how the SM affects welfare through lifting barriers to trade, but also how the SM affects population sizes across Europe – especially as ageing in most European is projected to reduce the labor force and thus hamper growth.