Lecture 2

• What was the population of EU27 as of January 2022?

  446.8 million, with Germany having the highest population and Malta the smallest.
• What is the projected population trend in the EU?

  Population growth is slowing, peaking in 2026, followed by a decline to 419.1 million by 2080.
• Define natural population change.


  The difference between live births and deaths.
• Define net migration.


  The difference between immigration and emigration.
• What are the economic consequences of declining fertility rates in the EU?

  Below the replacement level of 2.1 live births per woman, leading to an ageing population, higher dependency ratios, increased costs for pensions and healthcare, reduced government revenues, and slower economic growth.
• What influences migration decisions?

  Opportunity costs and time discounting.
• What are the positive private benefits of migration?


  Increased wages and human capital.
• How can migration affect labour markets?

  Migration can affect wages and efficiency, leading to externalities.
• What is the significance of varying unemployment rates in the EU?

  They reflect different economic conditions and institutional settings.
• What determines equilibrium in labour markets?

  Labour demand and supply, with collective negotiations impacting wage rigidity.
• How does trade integration affect labour markets?

  By reallocating resources, but rigidities can lead to unequal outcomes.
• What do the unemployment rates in EU27 and US (2000-2024) graph demonstrate?

  Differences and trends in unemployment over time.
• What are the measures of income inequality across and within countries?

  Across countries: Standard deviation of per capita income. Within countries: Gini coefficient.
• Define sigma-convergence.


  A decrease in income dispersion across EU countries over time, indicating convergence.
• Define beta-convergence.


  Negative relationship between per capita income growth and initial income levels, necessary for sigma-convergence.
• What does the Gini coefficient trends graph (2012-2018) show?

  Proportional growth rates and inequality dynamics across EU27 member states.
• What is the dependency ratio formula?


  $Dependency \;Ratio=$$(\frac{Number\;of\;dependents\;(age\;0-14\;and\;65+)}{Working-age\;population\;(age\;15-64)})*$$100$
• What is the formula for net migration?

  Net migration = (Number of immigrants) - (Number of emigrants)
• What is the formula for the standard deviation of per capita income?


  $\sigma_t =$$\sqrt{\frac{1}{N-1} \sum_{i=1}^{N} (y_{i,t} - \bar{y}_t)^2}$
• What is the formula for the Gini coefficient?

  $G =$$\frac{\sum_{i=1}^{N} \left( p_i - q_i \right)}{\sum_{i=1}^{N} p_i}$