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THE EUROPEAN UNION: ECONOMY, SOCIETY, AND POLITY. by Andr és Rodríguez-Pose London School of Economics Oxford University Press ISBN 0-19-874286-X. Part II. SOCIETY. Chapter 3 . Ageing. Introduction. Western Europe is ageing As a consequence of: Higher life expectancy

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THE EUROPEAN UNION:

ECONOMY, SOCIETY, AND POLITY

by

Andrés Rodríguez-Pose

London School of Economics

Oxford University Press

ISBN 0-19-874286-X


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Part II

SOCIETY


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Chapter 3

Ageing


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Introduction

  • Western Europe is ageing

    • As a consequence of:

      • Higher life expectancy

      • Falling birth and fertility rates

  • Ageing is likely to become a serious economic, social, and political problem once the baby boomers start retiring

    • Pressure on the already well-developed European welfare systems

    • Consequences for the economic potential of the EU

  • Countries are setting policies in motion in order to curb ageing


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Demographic change in the EU (I)

  • The EU is still the most populous among the major world economic powers.

    • 375 million vs 278 in the US and 117 in Japan

    • But the US has been catching up rapidly with the EU (57% of the population in 1960, 74% in 2000)

  • Low rates of population growth during the second half of the 20th century

    • Since 1960 the population of Europe never rose by more than 1% in a single year

    • In contrast, this rate was achieved 18 times in the US and 8 in Japan

    • Population growth in Europe has been declining steadily


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Average annual population growth in

the EU, Japan and the USA


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Demographic change in the EU (II)

  • Prospects are bleak:

    • According to the UN report on Replacement Migration will peak in 2005

    • By 2050 the EU will have 44 million less than in 2000 (a loss of 12%)

    • It will have 18 million less than the US

    • Twelve out of the fifteen current member states will lose population (exceptions: Ireland, Luxembourg, and France)

    • Population loss in Italy, Spain, and Greece will be in excess of 20%


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The decline in birth rates (I)

  • The second demographic transition:

    • Fall in birth rates

    • Lower number of marriages and marriages later in life

    • Unstable marriages and growing divorce rates

    • Increase in cohabitation

    • Increase in the number of children born out of wedlock


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The decline in birth rates (II)

  • Three types of demographic patterns:

    • ‘Population growth’ (France, the Netherlands, Ireland, US):

      • Early decline in birth rates, but births have stabilized and remain above the number of deaths

      • Still natural growth

    • ‘Early zero growth’ (Austria, Denmark, Sweden, UK):

      • Early decline in birth rates without stabilization

      • Negative growth rates which caused a reaction and a rebound of birth rates

    • ‘Late zero growth’ (Italy, Greece, Spain, Portugal, Japan):

      • Late, but sharp decline in birth rates

      • Zero growth since the early 1990s


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Evolution of birth and death

rates in selected European

countries, the US, and Japan

1960-97


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The decline in birth rates (III)

  • National demographic patterns hide important intranational differences:

    • Significant internal contrasts in birth rates in:

      • Italy (North/South division)

      • Germany (East/West division)

      • and, to a lesser extent, in other EU countries



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The decline in fertility rates

  • Women (and families) are deciding to have less children than ever before:

    • Total fertility rates in the EU are the lowest in the world, bar some countries in Eastern Europe and Japan

    • Fertility decline started in the mid 1960s

      • Early declines in the North (Denmark, Finland, Germany, Luxembourg and Sweden): Demographic core/periphery divide

      • Subsequent and more dramatic decline in the Mediterranean countries (Italy and Spain now with some of the lowest TFR in the world)

      • Short-lived rebound of fertility rates in Sweden and other Scandinavian countries in the early 1990s




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The ageing of the EU’s population (I) countries

  • The decline in birth and fertility rates is profoundly altering Europe’s age structure

    • Younger population cohorts are becoming smaller than older ones

      • The population cohort of those aged between 30 and 34 is 50% larger than those aged between 0 and 4

      • There are more 55 to 59 year olds than children between 0 and 4

    • Life expectancy is increasing

      • Women in most countries of the EU can now expect to live until the age of 80

      • Male life expectancy in all countries – bar Portugal – above 72


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Life expectancy at birth, 1970-1997 countries

Source: World Bank World Development Indicators (2000).


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The ageing of the EU’s population (II) countries

  • Europe is ageing

    • There are now 41.5 people million more over 70 than in 1980 (an increase of 40%)

    • The percentage of the elderly has risen considerably everywhere, bar Ireland

    • In Greece, Finland and Portugal the percentage of the population aged 65 and above doubled between 1960 and 1997

    • Italy and Spain were not far behind

  • Population projections predict that the process of ageing is far from over

    • According to the UN the over 65 will rise to 95.6 million in 2050 (29% of the population)



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Predicted evolution of the total and elderly population countries

in selected European countries, the EU and the US

2000-50

Source: Own elaboration with United Nations Population Division data. Medium variant.



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The factors behind the ageing process (I) countries

  • Causes for higher life expectancy

    • Advancement of medicine and health:

      • Eradication of many infectious and contagious diseases

      • Advancement in the treatment of degenerative diseases

      • Nutritional and health improvements

    • Social factors:

      • Relative wealth of European societies

      • Reduction in the number of hours worked during life


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The factors behind the ageing process (II) countries

  • Causes behind the decline in fertility

    • Advances and greater availability of contraceptive methods (M. Murphy) (although for some this is not a cause)

    • Economic factors:

      • Pecuniary and time cost of having children

      • Children cannot longer be regarded as sources for future family support

      • Opportunity costs of having children in societies with a high female participation in the labour market. This has become more evident recently:

        • Decline in job stability in Europe (relying on one salary is not enough!)


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The factors behind the ageing process (III) countries

  • Sociological factors:

    • The gap in educational attainment between men and women in western Europe has disappeared

    • Female employment has increased dramatically

    • Female employment is regarded as the main determinant in the fall of fertility rates

      • The opportunity cost of having a child increases

      • Especially, and despite some changes in male attitudes, since the burden of child-bearing still greatly falls on women

      • The opportunity cost of having a child increases as women’s wages rise

    • However this argument is found wanting when we notice that the countries with the lowest fertility rates also have the lowest female employment


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Evolution of female employment, 1970-1997 countries

Source: World Bank World Development Indicators (2000).


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Family policies (I) countries

  • European governments have adopted different policies to tackle declining fertility:

    • Very high support in Sweden (and Denmark and Finland):

      • Generous child benefit package

      • Generous public childcare provision

      • Lengthy maternity and paternity leaves

    • Austria and Germany

      • Generous policies

      • Greatest support for mothers who stay at home to look after children


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Family policies (II) countries

  • France (and Belgium and Luxembourg)

    • Horizontal and vertical redistribution of resources to families with children (especially for families with three children)

  • UK

    • Means testing and tackling child policy

    • Low-income mothers benefit the most from support meassures

  • Lower support in the Netherlands, Ireland, and Mediterranean countries


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Family policies (III) countries

  • Have family policies contributed to redress the decline in fertility?

    • Some claim that the impact has been weak (Gauthier; Hoem)

    • Others suggest that family policies have had an impact

    • The actual evidence is inconclusive

      • Lack of adequate family policies may have contributed to the decline in fertility in southern Europe

      • Some countries with more generous family policies (Sweden, Finland, Denmark, France, the UK) tend to have slightly higher fertility rates

      • But countries with similar family policy regimes differ in their fertility rates


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Social policies for old age countries

  • The process of ageing is putting European social services under considerable stress:

    • Social policies for old age have become one of the most important areas of public policy

    • Old age expenditure (as a % of GDP) has risen significantly since the 1980s and remained stable during much of the 1990s

    • Old age expenditure represents two fifths of all social expenditure (highest incidence in Italy, Greece, and Spain)



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Conclusion countries

  • Ageing poses a serious challenge for the future of European societies:

    • Society may become more conservative and risk-averse, less open to innovation and foreign influences, and less dynamic and able to compete

    • Ageing represents a challenge for public finances

    • More and better targeted policies may be needed…

    • Even if the perception of an aged society as a less dynamic society may be rather reductionist.


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