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Globaldemographicchangeandits economicconsequences

David E. Bloom Harvard University

Confrence sur lconomie de limmigration Conference on the Economics of Immigration University of Ottawa 29 October 2010
Global demographic change and its economic consequences University of Ottawa, 29 October 2010

EllisIsland,circaearly1900s

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

First message

Demographics Matter

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Second message

Demographics Matter A Lot

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Outline
Twobreakthroughideas Demographicchangearoundtheworld Economicimplicationsofdemographicchange Demographyisnotdestiny

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Outline
Twobreakthroughideas Demographicchangearoundtheworld Economicimplicationsofdemographicchange Demographyisnotdestiny

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Worldpopulationmilestones
Worldpopulationinbillions Populationandyear 1billionin1804 2billionin1927 3billionin1960 4billionin1974 5billionin1987 6billionin1999 7billionin2012 8billionin2025 9billionin2046
Source: UN World Population Prospects, 2008 Revision

Timetakentoaddabillion About1,000,000years 123years 33years 14years 13years 12years 13years 13years 21years

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

10 9 8 Population (billions) 7 6 5 4 3 2 1 1950

IndiaandChina, asashareofworldpopulation

2028: India surpasses China 2010, % of world pop: China: 20%; India: 18% 2050, % of world pop: China: 15% India: 18%

1975 India

2000 China Rest of World

2025

2050

Source: World Population Prospects 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Historyofthought

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Breakthroughideas
1. Thedemographicdividend
babybooms,busts,andechoes theironlawofdemography goodpolicyenvironment

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Thedemographictransition

Population growth rate

Birth rate

Death rate time


Global demographic change and its economic consequences University of Ottawa, 29 October 2010

PigPython

Cover from the book by David Cork and Susan Lightstone: The Pig and the Python, How to Prosper from the Aging Baby Boom

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Aviewfromtheinside.

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Averageannualgrowthrateof GDPpercapita,19752005
7%
East Asian miracle

6% 5% 4% 3% 2% 1% 0% -1% East Asia and Pacific Sub-Saharan Africa


Sub-Saharan African debacle

Source: World Bank, World Development Indicators 2009

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Averageannualgrowthrateof GDPpercapita,19752005
7%
East Asian miracle

6% 5% 4% 3% 2% 1% 0% -1% East Asia and Pacific Sub-Saharan Africa


Sub-Saharan African debacle

Source: World Bank, World Development Indicators 2009

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Changingagestructure,19502010
2.50 2.25 2.00 1.75 1.50 1.25 1.00
1950
Source: UN, World Population Prospects 2008

Ratio of working-age to non-working-age population

1960

1970

1980

1990

2000

2010

East Asia & Pacific

Sub-Saharan Africa
University of Ottawa, 29 October 2010

Global demographic change and its economic consequences

2 percentagepoints/yearX 30 years

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Breakthroughideas
1. thedemographicdividend
babybooms,busts,andechoes theironlawofdemography goodpolicyenvironment

2. healthiermeanswealthier
laborproductivity education savings FDI
University of Ottawa, 29 October 2010

Global demographic change and its economic consequences

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

UNSummitontheMDGs
September2022,2010

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Demographicstoincome lotsofoomph!!!
Demographics

Income

A 10-year gain in life expectancy translates into between onehalf and one-full additional percentage point of annual growth of income per capita The demographic dividend accounted for roughly one-third of the East Asian miracle: 2 percentage points/year
Global demographic change and its economic consequences University of Ottawa, 29 October 2010

Outline
Twobreakthroughideas Demographicchangearoundtheworld Economicimplicationsofdemographicchange Demographyisnotdestiny

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Infantmortalityrate,19502010
85
175

Lifeexpectancy,19502010
80 Life expectancy at birth, years

150 Deaths per 1,000 live births 125 100 75 50 25 0 1950

75 70 65 60 55 50 45 40 1950

1960

1970

1980

1990
Developing

2000

2010

1960

1970

1980

1990
Developing

2000

2010

Developed

Developed

Totalfertilityrate,19502010
6 5

Crudebirthanddeathrates,19502010
50 40 30 20 10 0
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

1 1950

Per 1,000 population

Children per woman

1960

1970

1980

1990
Developing

2000

2010

CBR, Developing CBR, Developed

CDR, Developing CDR, Developed

Developed

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

1950

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

1960

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

1970

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

1980

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

1990

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

2000

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

2010

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

2020

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

2030

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

2040

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Canada

2050

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Nigeria

1950

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

1960

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

1970

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

1980

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

1990

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

2000

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

2010

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

2020

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

2030

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

2040

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

2050

Source: UN, World Population Prospects, 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Outline
Twobreakthroughideas Demographicchangearoundtheworld Economicimplicationsofdemographicchange Demographyisnotdestiny

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Migrationstatistics
214millioninternationalmigrants
Nearlyhalfarewomen 27.1millioninternallydisplacedpersons 15.2millionrefugees

Indevelopedregions,approx.1in10 peopleisamigrant Indevelopingregions,approx.1in67 peopleisamigrant


Sources: InternationalOrganizationforMigration:http://www.iom.int/jahia/Jahia/aboutmigration/factsandfigures/lang/en UNInternationalMigrantStock,2008Revision:http://esa.un.org/migratiON/index.asp?panel=1

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

TheEconomistweighsinagain
Indiasagestructureis evolvinginthesame directionasChinas. ItsbehindChina,butthe shareofitspopulation thatisofworkingageis growing.Indiastands readytoreapa demographicdividend.
Global demographic change and its economic consequences University of Ottawa, 29 October 2010

6,000 GDP per capita, PPP (constant 2005 int'l $)

Realincomepercapita

5,000

4,000

3,000

2,000

1,000

1980 1985 1990 India 1995 China


University of Ottawa, 29 October 2010

2000

2005

Source: World Development Indicators 2009

Global demographic change and its economic consequences

Demographicchanges
Total fertility rate
7 Children per woman 6

Ratio of working-age to non-working-age population


3.0

2.5
5 4 3

2.0

1.5
2 1 1950

1975

2000
China India

2025

1.0 2050 1950

1975

2000
China India

2025

2050

Source: World Population Prospects 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Ratioofworkingagetononworking agepopulation,Canada,19502050

Source: World Population Prospects 2008

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Outline
Twobreakthroughideas Demographicchangearoundtheworld Economicimplicationsofdemographicchange Demographyisnotdestiny

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Reapingthedemographicdividendisnot automatic,andmaybetransitory
Needtocatalyzedemographictransition Needtoacceleratedemographictransition esp.fertilitydecline Needcompatiblepoliciesinotherareas

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Catalyzingandacceleratingthe demographictransition
Investmentsinhealth Accelerationoffertilitydecline
Expansionoffamilyplanning Childsurvival Increasingschoolenrollment

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Capturingthedemographic dividend
Needcompatiblepoliciesinotherareas
education health labormarket trade governance macroeconomicmanagement

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

IndianPMSinghonthedemographicdividend

Looking ahead, we enjoy a demographic dividend in terms of a growing working-age population in a world that is ageing rapidly.
23 Nov 2009
Global demographic change and its economic consequences University of Ottawa, 29 October 2010

FormerMexicanPresidentVicenteFox, onthedemographicdividend.
"Ialsowanttotellyouthattodaywehavea verypotentarmwithwhichtoovercome inequalitiesandmarginalization.Thatarmis whatwehavecalledthedemographic dividend." "Itiscrucial,trulycrucial,thatwetakefull advantageofit. Otherwise,wewillhavelosta greatopportunity. Asothershavesaidbefore me,educationandemploymentarethewaysto takeadvantageofthedemographicdividend." "Thesustainabilityofoursocialandeconomic developmentdepends,inlargemeasure,onour responsetothisopportunity."
Global demographic change and its economic consequences University of Ottawa, 29 October 2010

WBManagingDirectorNgoziOkonjo Iwealaonthedemographicdividend
Oneofthegreatestuntapped growthdriversinNigerias economyisouryouth population. Publicandprivatesectorsshouldinvestinhuman capital,laboursupply,andsavingstosecurethe demographicdividend.Thesehelptocreateknowledge basedeconomy.Policiesshouldbedirectedtowards gettingthedemographicdividend.
Global demographic change and its economic consequences University of Ottawa, 29 October 2010

a threat more grave and certain than those posed by chemical weapons, nuclear proliferation, or ethnic strife.
-- Peter Peterson

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Movingfromdemographicsto economics
Takingaccountofdemographicsin economicgrowthanalysesandprojectionsis technicallychallenging Inprinciple,bothbehavioralchangesand policychoicescanaffecttheselinks

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Globallaborforce:1960,2005,and2050
YEAR 2005 Actual

1960 Actual LFPR


(labor force/pop 15+)

2050 Projd

67.4

65.8 47.1

61.4 49.0

LFTP
(labor force/total pop)

42.3

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Economicimplications
Accountingeffects,yes,butdontforget aboutfertilitydecline Behavioraleffects,too
Womenslaborforceparticipationrises Childhealth,educationalattainment,and cognitivefunction Longerlifespansmaymeanhighersavings

Potentiallykeyroleforpublicpolicy
Ageofretirement Internationalmigration

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Changesinmalelifeexpectancyand retirementage,19652005,43countries
Increase 1965 2005 (years) Malelifeexpectancy, average Maleretirementage, average 64.7 73.4 8.8

62.9

63.3

0.4

Source: World Bank (2007) for life expectancy. Social Security Administration, United States (2010) for retirement age.

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

AFP/GETTY Riot police charge at student demonstrators in Lyon, October 18, 2010

GETTY Images Students and riot police clash in Paris October 21, 2010

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

Thepossibilityofreplacementmigration

UN World Population Prospects , 2008 Revision

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

MaxFrisch(19111991)

We wanted workers, but we got people instead.

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010

ThomasHobbes
(15881679)
Lifeinthestateofnature is"solitary,poor,nasty, brutish,andshort. (Leviathan,1660)

Global demographic change and its economic consequences

University of Ottawa, 29 October 2010