Aging Europe and Sustainability: Evidence from Panel Econometrics

This study analyzes the interaction among demographic aging, economic growth, and environmental sustainability in the European Union (EU). Rapid population aging increases fiscal pressures through pension and healthcare expenditures, constrains labor markets, and challenges conventional growth models. The environmental effects of aging are mixed: reduced mobility and consumption may lower emissions, while healthcare expansion and energy-inefficient housing may raise them. Using a dynamic panel econometric approach with Common Correlated Effects (CCE) estimators and PCA-based structural controls for 27 EU countries over 2000–2023, the findings confirm long-run co-integrating relationships. The results highlight the need to consider grey economy dynamics, tax compliance, and institutional trust in sustainability and welfare policies. The policy implications include promoting active aging, modernizing healthcare systems, improving energy-efficient housing, and strengthening intergenerational equity. Overall, demographic aging should be reframed not as a burden but as an opportunity for structural reform and sustainable transformation.