Demographic aging is a significant concern for many developed countries. In order to correctly address the associated problems, it is crucial to properly identify the needs of the labour markets. In this paper we focus on the impact of youth on regional employment rates in 141 German labour market areas. We show that fixed effects models with varying β coefficients are not adequate to reflect and handle the heterogeneity. By employing an innovative methodology that is combining a latent class analysis with self-organising maps, this research depicts a great deal of variation of how ageing impacts employment opportunities of the working age population at the regional level. Although our OLS and IV estimations are in line with previous research on German local labour markets (e.g., with Garloff et al. (2013))-although contradicts with the work of Shimer (2001), we offer further explanations for a number of issues not yet addressed in the literature.
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