Global Demography

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Global Demography

• The issue of how many people are in the world
  (population), the growth rate of that population,
  their age and geographic distribution is a
  fundamental economic and social question
• The study of these questions is referred to as
• DEMOGRAPHY
• To understand the world economy some basic facts
  about world demography are essential

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This chart shows the geographic distribution of
the worlds population from 1800 to
2050(estimated)
Source United Nations Population Division,
Briefing Packet, 1998 Revision of World
Population Prospects.
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World population growth over the next 150 years
is a developing country issue
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History Population growth

• Population change affects all our lives in a much
  more immediate way today than it has throughout
  most of human history. For the first one-half
  million years of human existence, the population
  growth rate was about zero. The population stayed
  about the same size from year to year. It was not
  until the 1700s that the modern era of population
  growth began. Between 1850 and 1900, the annual
  growth rate reached 0.5 percent. The rate surged
  to 2.0 percent by the mid-1960s, dropped to 1.7
  percent by the mid-1980s, and declined to about
  1.4 percent by 2000.
• the last slide shows one set of population
  estimates but there is substantial controversy
  over these estimates

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Births and Deaths

• Human population grew rapidly during the
  Industrial Revolution, not because the birth rate
  increased, but because the death rate began to
  fall. This mortality revolution began in the
  1700s in Europe and spread to North America by
  the mid-1800s. Death rates fell as new farming
  and transportation technology expanded the food
  supply and lessened the danger of famine. New
  technologies and increasing industrialization
  improved public health and living standards. Late
  in the 19th century, birth rates also began to
  fall in Europe and North America, slowing the
  population growth that had resulted from
  continued moderately higher birth rates than
  death rates.

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As Death Rates fell life expectancy steadily
increased. Today--
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Fertility rates have huge implications for
population projections. Numbers below are
billions of people as of 2050
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The big debate fertility rates
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Average fertility levels in the developing world
dropped from over 5.9 children per woman in the
1970s to about 3.9 children per woman in the
1990s.
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Changing age structures across the globe

• Rapid changes in birth and death rates having a
  large impact today on the age structure of the
  population across the globe with much older
  populations in the high income countries
• As seen in next figure in low-income countries
  more than one-third of the population is under
  15, compared with less than one-fifth in
  high-income countries

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An End to Population growth?

• While no one knows exactly when the population
  will stop growing, the United Nations and other
  organizations estimate that world population
  could continue to grow well into the 22nd
  century, reaching 9.8 billion by 2150. These
  outcomes are based on the medium projections,
  which assume (to varying degrees for different
  countries) that the downward trend of fertility
  rates will continue and stabilize at 2.1 children
  per woman. They also assume continued mortality
  declines. If fertility were to decrease at a much
  faster pace and stabilize at 1.6 children per
  women, world population could stop growing much
  sooner by 2050 at 7.3 billion. Given that
  scenario, the population would decline to 5.3
  billion by 2150. On the other hand, slower
  declines in fertility could lead to a global
  population of 10.7 billion by 2050 and 16.2
  billion in 2150, with fertility projecting to
  stabilize at 2.5 children per woman.

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Migration

• Populations in particular regions also change due
  to migration
• Over the past 15 years, the number of people
  crossing borders in search of a better life has
  been rising steadily. At the start of the 21st
  Century, one in every 35 people is an
  international migrant. If they all lived in the
  same place, it would be the world's fifth-largest
  country
• Migration has always been a part of the world
  economylargest migrations occurred in the 19th
  centurythere are some predictions that
  migrations will grow in size as developed
  countries populations agebut such projections in
  the past have been very unreliable
• Note that migration is not just a rich country
  phenomenasee next chart.

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Migrant labour growing in importance in OECD
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But big picture is evident here-migration from
low to high income
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Aging in Developed World

• In 1950 there were about 200 million persons aged
  60 and over in the world, constituting 8.1 per
  cent of the global population
• By 2050 there will be a ninefold increase and the
  world's elderly population is projected to be 1.8
  billion people, about 20 per cent of the total
  population
• Developing countries still have a relatively
  young population while populations in
  industrialized countries are relatively old
• By 2050, the more developed regions will have a
  very old population, with the proportion of older
  persons projected to increase to 33 per cent

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Life Expectancy

• In 1960, average life expectancy in the OECD area
  was 66 years. Today it is 76.
• But ageing populations are also linked to low
  fertility rates (see graph 1). On average each
  woman in the OECD area has 1.6 children and in
  countries such as Italy, Spain and the Czech
  republic the average is about 1.1-1.2 children
  these are well below the 2.1 children required to
  maintain a stable population.

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Dependency Ratios

• For the OECD area as a whole, the number of
  people aged 65 years and over relative to the
  number aged between 20 and 64 years the
  dependency ratio is expected to double in the
  next five decades to reach almost 50.

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ILO International Labour Organization
Implications of Aging
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Other aspects of aging and labour force

• Participation rate of older men (Over 55) in the
  labour force has been falling until very recently
  
• Likewise age of retirement has been falling in
  many rich countries
• Severe problems for pay-as-you-go pension schemes
• healthcare spending is also likely to increase,
  especially since the share of the very old (80
  years old and above) is expected to rise from
  less than 3 to more than 8 of the OECD
  population over the next 50 years ( and this age
  group is one of the biggest users of healthcare
  services ) The over-65 age group accounts for
  40-50 of healthcare spending and their per
  capita healthcare costs are three to five times
  higher than those under 65.

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How do most pension plans work?

• Most pension plans are Pay-as-you-go
• Existing workers pay a tax or levy which is used
  to fund the payouts to current retirees
• As long as number of workers rising faster than
  the number of retirees system more or less ok
• But with people living longer and fewer young
  workers entering the labour force many of these
  plans are now in trouble
• Only viable solutions are to a) cut benefits
  payout to retirees, b) increase tax/levy on the
  non-retired workers or c) make people worker
  longer-reduce retirement age or some combination
  of the above