Introduction

Throughout the postwar period, the age composition of the Dutch labour force has shown large changes. And according to demographic predictions, the driving force behind these developments has not yet come to an end. In this paper we study some consequences by looking at historical developments, and we use our findings for some speculation about future developments. Throughout the paper, we will distinguish labour by level of education, since this is one of the most obvious sources of heterogeneity. We will study the changes in the educational composition of the labour force and we discuss possible explanations. We will consider labour force participation behaviour, as it is a vital step between population and labour force. And we will analyse the consequences for the structure of wages of a changing composition of the labour force, by age and education (including the impact of variations in cohort size). This latter analysis will be conducted against the background of generally claimed rigidity in the Dutch wage structure, originating in institutionalization of wage determination and supported by the welfare state.

In the next section, we characterize the nature and history of the Dutch labour market. In section 3, we document changes in labour force composition; in section 4 we discuss causes and consequences, based on theory and available research. In section 5, we present our own contribution to empirical analysis, focussing on Mincerian earnings equations estimated for 14 cross-sections between 1962 and 1989.