Aging and Economic Opportunities: Major World Regions Around the Turn of the Century

Jere R. Behrman, Suzanne Duryea, Miguel Székely
1999 Social Science Research Network  
This paper presents new evidence for major world regions and for the most populous countries in each region on associations between the average ages of populations and three groups of economic outcomes: (1) macroeconomic aggregates (domestic saving as a share of GDP, GDP per capita, capital per worker and tax revenue as a share of GDP); (2) governmental expenditures on education and health; and (3) social indicators (inequality, unemployment, homicide rates, and schooling progression rates).
more » ... results suggest that the variables considered follow clear age-related patterns, that the patterns differ by regions, and that the patterns differ with different policy regimes related to trade openness, domestic financial market deepening and macroeconomic volatility. The evidence is consistent with the possibility that some age structure shifts can provide favorable conditions for development. Apparently regions such as East Asia in recent decades have been able to benefit from this demographic opportunity. However, in others such as Latin America and the Caribbean -which is at the verge of experiencing the largest age structure shifts in the coming decades-creating an adequate economic environment to translate the opportunity into higher living standards for its population is a major challenge. the world (54%), while the share of population in the old age group is negligible (3%). The average population age ranged from 21.0 to 24.2 years in 1995 (with Eastern Africa the lowest). Central and South America and South-central, Southeastern and Western Asia also are relatively young (with average ages in the 24.4 to 27.0 range), but are well into the second stage of the transition. These subregions have on average around 35% of their population in the young age group, around 61% in the working age group and not more than 5% in the old group. In contrast, Asia and the countries in Europe and North America are well into the final stage of the transition. Around 20% of their populations is in the young age group, two thirds of their populations is of working age, and with the exception of Eastern Asia, more than 12% of their populations is old. The average ages in 1995 were 30.5 years for Eastern Asia, 35.2 for Northern American, and between 35.8 and 38.3 years for the European subregions (with Western Europe the highest). Thus there is considerable current variation in age structures among regions and subregions, with average ages by subregions in 1995 ranging from 21.0 in Eastern Africa to 38.3 years in Western Europe. The regions/subregions that are relatively "younger" include all those in Africa, Latin American and the Caribbean (LA), and Asia (excluding Eastern Asia). Those in Eastern Asia and Europe and North America are relatively "older." Due to the speed of the demographic transition in the developing world, there is a tendency for the "younger" regions to catch up with the "older" ones. By the year 2020, the proportions of populations in working age across all subregions (with the exceptions only of Western, Eastern and Middle Africa) will be fairly similar -between 0.63 and 0.69 --according to the UN medium projections. The main difference among regions will be that the proportion of the old will be much larger in the "older" countries (0.12 in Eastern Asia and from 0.16 to 0.21 in the subregions of Europe and North America but less than 0.10 in the "younger" subregions), while the younger ones will still have substantial proportions of the young (from 0.24 to 0.41 in Africa, Asia (excluding Eastern Asia), and LAC, but under 0.20 in the "older" subregions). The young dependency ratios are projected to decline significantly between 1995 and 2020 in the younger subregions, but only marginally in the older ones. The old dependency ratios are projected to increase quite dramatically in the older subregions, but only marginally in the younger subregions. The average ages across subregions are also slowly tending to convergence, though with considerable lags for three of the African subregions. Between 1995 and 2020, the UN medium
doi:10.2139/ssrn.1817202 fatcat:ehz2uaqzqrbf7jwy34x4hugwz4