Some economic and fiscal implications of the demographic transition in latin america
Download
1 / 41

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


  • 78 Views
  • Uploaded on

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.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Some economic and fiscal implications of the demographic transition in Latin America.' - nan


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


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 employment to annual growth of GDP/capita, 1997-2007.

Increases in health obligations will rival those of pensions


“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) policymakers would be adrift in a sea of unorganized data.” Paul 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.


28 countries policymakers would be adrift in a sea of unorganized data.” Paul

are participating in

the NTA project.



Relative Consumption per Person in intergenerational resource flows

High and Middle Income Countries

Health

Education



Long run budget projections
Long-run budget projections high income countries.

  • 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 high income countries.

  • 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 -> high income countries. demographic changes have large fiscal impacts.



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


Youngest working-ages.

Oldest


Key fiscal findings
Key Fiscal Findings working-ages.

  • 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.


http: www.cepal.org/celade working-ages.

Email: [email protected]


ad