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Chapter 5
FUTURE
POPULATION
TRENDS
Modified for EC 375 by
Bob Murphy
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Figure 5.1 World Population, 1850–2150
Source: United Nations Population Division (2000).
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Forecasting Population
• Tools:
– Age-­‐specific survivorship func6on.
– Age-­‐specific fer6lity func6on.
• Roll process forward to get forecast:
– Difficulty is predic6ng how mortality and fer6lity will change in future.
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Figure 5.2 Population Forecasting
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Forecasting Mortality
• In past, changes in mortality as important as changes in fer6lity.
– Increases in probability that a girl lived through childbearing years had large effects on NRR.
• Today, most girls live through childbearing years:
– 97% in U.S.; 82% in India, so liNle scope for further effects.
• Increasing life expectancy does increase popula6on size, but small effect overall.
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Forecasting Fertility
• Replacement Fer.lity: – Approximately 2.1 for developed countries, bit higher for developing.
• Rich Countries:
– TFR < Replacement Fer.lity
• So without immigra.on, popula.on will shrink.
• Average age of popula.on will rise.
– But preferences/incen.ves may change.
– Could be a sta.s.cal illusion:
• Tempo Effect-­‐-­‐rise in average age of first birth
•
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Forecasting Fertility
• Tempo Effect:
– Can explain decline in some countries but not others since effect is temporary.
• Difficulty of Forecas6ng Fer6lity:
– Example of Japan
– U.S. baby boom and baby bust:
• 1964: 4 million births
• Census Bureau predicted 5 million in 1974.
• 1974: 3.2 million births.
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Figure 5.3 Total Fertility Rate in Japan: Actual
versus Forecast
Source: Yashiro (1998).
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Forecasting Fertility
• Poor Countries:
– Uneven decline in recent decades.
– Figure 5.1 uses baseline assump6on that developing world reaches replacement rate by 2050.
– But what happens if this is not correct?
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Table 5.1 Fertility in the Developing World
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Forecasting Fertility
• Change Assump6on:
– With constant TFR: • Popula.on at 14.9 billion (vs. 9.4 billion forecast) in 2050.
• Popula.on at 57.1 billion (vs. 10.4 billion forecast) in 2100!
– Modest departure of 0.5 above replacement rate:
• Popula.on at 11.1 billion in 2050.
• Popula.on at 17.5 billion in 2100.
– Small differences maNer a lot
– Why might we be skep6cal of baseline?
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Figure 5.4 Income per Capita versus Total
Fertility Rate
Sources: Heston, Summers, and Aten (2011), World Development Indicators database.
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Income and Fertility
• Income likely to be lower than levels associated with replacement fer6lity rates in the past.
– Example: Nigeria
• TFR of 5.6 in 2009, Forecast of 2.1 in 2050.
• Per capita income of $2034 in 2009, $4581 in 2050 (2% per year.
• Figure 5.1 shows TFR of 3.0 for this income level.
– But not impossible:
• Have seen some decline over .me in income levels associated with replacement fer.lity.
• Also, economic growth forecast may be wrong.
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Demographic Momentum
• NRR = 1, doesn’t immediately lead to zero popula6on growth.
• Number of children born depends on
– Fer6lity rate;
– And the number of women in their childbearing years.
– If number of women in childbearing years rises, even if fer6lity rate is constant, number of babies born will rise. This is known as “Demographic Momentum.”
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Demographic Momentum
• A country with rapid popula.on growth and high fer.lity has many more young people than old. If experience a sudden drop in the NRR to 1.0:
– Number of babies born ini.ally declines.
– But number will rise as more women enter childbearing years.
– Eventually, demographic momentum wears off and popula.on growth is zero.
– Important for forecas.ng next few decades, but over long run key determinant of popula.on growth will be fer.lity. Copyright © 2013 Pearson Education, Inc. Publishing as Addison-Wesley
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Population Growth in the Very Long Run
• Argument against constant popula6on growth is power of compounding:
– 1% per year growth (< current rate of 1.8%) yields popula6on of 45 billion in 2200!
– And, popula6on of 1 trillion in 2512!
– How many people can Earth support?
– With breakdown of Malthusian model, we know very liNle about long-­‐term path of popula6on.
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Figure 5.5 The Great Spike in World
Population Growth
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Economic Consequences of Demographic
Change
• Effect from Slowdown in Popula6on Growth:
– Solow growth model.
• Effect from Aging of the Popula6on:
– Fewer workers compared with re6rees.
• Redistribu6on of World Popula6on:
– Shii toward poorest countries affects world growth rate.
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Table 5.2 Average Annual Growth Rates
of Population by Country Group
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Slowdown in Population Growth
Slowdown in less developed countries from 2.1% per year
to 0.8 percent per year. Use Solow model to determine effect
on per capita income:
α /1− α
⎡ nj + δ ⎤
y
=⎢
⎥
y
⎣ ni + δ ⎦
where δ = 0.05, α =1/3. Use n = 0.008 for i and n = 0.021 for
ss
i
ss
j
j, to calculate:
yiss
= 1.11
ss
yj
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Slowdown in Population Growth
If instead, α =2/3, then:
yiss
= 1.50
ss
yj
So, these countries would acheive higher per capita income
as a result of the slowdown in population growth. But,
population still will be increasing. Level will matter and
possibly strain resources.
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Aging of the Population
• Declining mortality and fer6lity will lead to an older popula6on:
– Median age will rise from 26.5 years to 36.2 years by 2050.
• Aging is relevant for economic growth:
– GDP/Workers versus GDP/Popula6on
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Figure 5.6 Changes in the Age Structure of
the Population, 1950–2050
Source: United Nations (2002).
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Aging of the Population
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Figure 5.7 Working-Age Fraction of the U.S.
Population, 1950–2050
Source: U.S. Census International Database.
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Aging of the Population
• Decline in the share of the popula.on that is of working age in U.S:
– From 60% to 54% over period 2010 to 2030.
– So, this will be reduce growth rate of GDP per capita.
– By contrast, from 1965 to 1985, the share increased from 51% to 59% and boosted growth of GDP per capita. Growth rate of fraction of population that works =
1/20
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⎡ 0.54 ⎤
⎢⎣ 0.60 ⎥⎦
= −0.005 or − 0.5%.
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Table 5.3 Some Cases of Population Aging
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World Population Distribution
• Shii in distribu6on of popula6on across regions and countries.
• Shii toward countries that are the poorest:
– Share living in the currently more developed countries will decrease from 20% to 13% between 2000 and 2050.
– Share living in the currently least developed countries will rise from 11% to 20%. Copyright © 2013 Pearson Education, Inc. Publishing as Addison-Wesley
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Figure 5.8 Distribution of the World’s
Population
Sources: Livi-Bacci (1997), United Nations Population Division (2000).
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World Population Distribution
• Shii of popula6on toward poorer countries will lower the growth rate of world GDP per capita:
– Even if GDP per capita growth is same in rich as poor countries, the shii in popula6on toward poor means slower average growth overall.
– This is known as the “composi6on effect” and occurs because the balance of the world’s popula6on is shiiing toward poor countries. Copyright © 2013 Pearson Education, Inc. Publishing as Addison-Wesley
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Table 5.4 The Composition Effect
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World Population Distribution
• Shii in popula6on from currently rich to currently poor countries, doesn’t mean that a greater share will live in poor countries in the future.
• Outcome depends on whether popula6on growth rates in of currently poor countries offsets the income growth taking place in these countries.
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