Demographic Changes and Human Capital Retention: Rethinking EU Cohesion Policy

Zalai, Csaba (2026) Demographic Changes and Human Capital Retention: Rethinking EU Cohesion Policy. FINANCIAL AND ECONOMIC REVIEW, 25 (2). pp. 41-64. ISSN 2415-9271 (print); 2415–928X (online)

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Abstract

The paper examines the macroeconomic and regional implications of the EU’s demographic transition, with a particular focus on the role of the free movement of labour. It highlights that demographic disparities, exacerbated by population decline and emigration, will weaken the EU’s competitiveness and fiscal sustainability in the medium term, while the sustained outflow of human capital will deepen regional inequalities and undermine prospects for economic convergence. The paper argues that the systemic integration of demographic considerations into cohesion policy is key to the EU’s long-term economic stability and competitiveness. The 2028–2034 Multiannual Financial Framework provides an opportunity to strengthen policy instruments that support human capital retention and mitigate brain drain. In this regard, the concept of “freedom to stay”, proposed by Enrico Letta, could provide a new policy framework.

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