"Forecasts show a substantially decreasing and ageing labour force in Germany. This paper provides a decomposition of the projected change in the overall labour force into three parts. The first, called the 'demographic component', shows the effects of fertility, mortality and a changing age structure of the population. The second effect is the migration component. This part is due to the cumulative net inflow of migrants, but includes their reproductive behaviour as well. Changes in the participation rates give the third effect, the participation component. The decomposition was conducted by comparing different labour force scenarios until 2050. The method can easily be extended for decomposition into more than three factors. Not surprisingly, the downward trend in the labour force is attributable only to population effects. Ageing of the baby-boom generation and low birth rates both are the responsible factors behind. Neither a strong increase in labour force participation nor large immigration flows can halt this trend in the labour force. As the age structure is almost given and increasing fertility rates only have positive effects in the very long run, the projected decline in the labour force should be taken as a fact."

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