Some economic and fiscal implications of the demographic transition in latin america
This presentation is the property of its rightful owner.
Sponsored Links
1 / 41

Some economic and fiscal implications of the demographic transition in Latin America. PowerPoint PPT Presentation


  • 44 Views
  • Uploaded on
  • Presentation posted in: General

Some economic and fiscal implications of the demographic transition in Latin America. Tim Miller CELADE - Population Division of United Nations Economic Commission for Latin America and the Caribbean.

Download Presentation

Some economic and fiscal implications of the demographic transition in Latin America.

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Some economic and fiscal implications of the demographic transition in latin america

Some economic and fiscal implications of the demographic transitionin Latin America.

Tim Miller

CELADE - Population Division of United Nations Economic Commission for Latin America and the Caribbean.

Regional Workshop on The Economic, Fiscal, and Welfare Implications of Chronic Diseases in the Americas, November 24-25, 2009

PAHO Headquarters, Washington, DC


Three messages about latin american demography

Three messages about Latin American demography.

  • Population of Latin America is aging.

  • Economic implication: A “demographic dividend” period in which the working-age population grows faster than the total population.

  • Fiscal projection: Future health obligations larger than future pension obligations in Latin America.


1 demographic transition

1. Demographic transition

Population aging in Latin America


Population aging the slow revolution

Population aging:The slow revolution.

1950

2005

2050


2 the demographic dividend

2. The demographic dividend

A temporary period lasting several decades in which age structure is particularly favorable for economic growth.


The impact of demographic transition on economic wellbeing

The impact of demographic transition on economic wellbeing.

Y/N

Y/W

W/L

L/N

GDP per

capita

GDP per

worker

Proportion

of

working-age

population

with a job

Proportion

of

population

in the

working-ages


The impact of demographic transition on economic wellbeing1

The impact of demographic transition on economic wellbeing.

GDP

Per capita

Productiv

ity

Employment

Age structure

GDP per

capita

GDP per

worker

Proportion

of

working-age

population

with a job

Proportion

of

population

in the

working-ages


Direct impact of demographic transition positive then turns negative

Direct impact of demographic transition: Positive then turns Negative

GDP

Per capita

Productiv

ity

Employment

Age structure

Demographic Transition


Indirect impact of demographic transition might be many times larger

Indirect impact of demographic transition: might be many times larger.

GDP

Per capita

Productiv

ity

Employment

Age structure

Bloom and Canning (2004,2007)

Mason & Lee (2006)

Lee & Mason (2008)

CEPAL (2009a, 2009b)

Human & Financial Capital

Female Labor Force Participation

Demographic Transition


Some economic and fiscal implications of the demographic transition in latin america

Contributions of changes in age structure, productivity, and employment to annual growth of GDP/capita, 1997-2007.


3 long run fiscal impact of changing age structures

3. Long-run fiscal impact of changing age structures

Increases in health obligations will rival those of pensions


Some economic and fiscal implications of the demographic transition in latin america

“Without measures of economic aggregates like GDP, policymakers would be adrift in a sea of unorganized data.” Paul Samuelson


National transfer accounts ntas cuentas nacionales de transferencias

National Transfer Accounts (NTAs)Cuentas Nacionales de Transferencias

  • A new tool for monitoring the impact of population aging on the economy.

  • A satellite account of National Accounts which measures economic activity by age.

  • International project under direction of Professors Ron Lee (UC Berkeley) and Andy Mason (U Hawaii). CEPAL/IDRC project consists of 5 Latin American countries.


Some economic and fiscal implications of the demographic transition in latin america

28 countries

are participating in

the NTA project.


Some economic and fiscal implications of the demographic transition in latin america

The life cycle pattern of consumption is supported by large intergenerational resource flows.


Some economic and fiscal implications of the demographic transition in latin america

Relative Consumption per Person in

High and Middle Income Countries

Health

Education


Some economic and fiscal implications of the demographic transition in latin america

Relative health spending per older person much higher in high income countries.


Long run budget projections

Long-run budget projections

  • Impacts of demographic changes are profound, but not observed in the short-run.

  • Mindful of population aging, several governments have recently begun to issue long-run projections of their budgets: European Union, United States, Australia, New Zealand, United Kingdom.

  • Our aim: long-run projections of public expenditures on education, health care, and pensions for 10 Latin American countries.


Projection model based on age

Projection Model based on Age

  • E(t)/GDP(t) =

    Sum over x { b(x,t) * P(x,t)/P(20-64,t) }

  • b(x,t) = age-specific spending relative to GDP/working-age adult. Taken from NTA project. Move toward OECD levels as income/worker rises.

  • p(x,t) = population at age x in year t. Taken from CELADE.


Strong age pattern in government spending demographic changes have large fiscal impacts

Strong age pattern in government spending -> demographic changes have large fiscal impacts.


Large declines in school age population relative to working ages

Large declines in school-age population relative to working-ages.


Large increases in retirement age population relative to working ages

Large increases in retirement-age population relative to working-ages.


Some economic and fiscal implications of the demographic transition in latin america

Youngest

Oldest


Key fiscal findings

Key Fiscal Findings

  • On average, the fiscal impact of population aging will be as large in Latin America as in Europe.

  • Fiscal impact of population aging varies among the 10 countries – with pension reforms playing a large role.

  • Increases in health care obligations are likely to rival those of pensions.

  • Population aging greatly reduces the costs of educational investments in the region.


Some economic and fiscal implications of the demographic transition in latin america

http: www.cepal.org/celade

Email: [email protected]


  • Login