Demographic changes, migration and economic growth in the ...€¦ · Demographic changes,...
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Demographic changes, migration and economic growth in the euro area Axel Börsch-Supan • Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy (MPISOC), • Technical University of Munich (TUM) • National Bureau of Economic Research (NBER) in Cambridge, Mass., USA ECB Forum on Central Banking 2019, Sintra, Portugal, 17-19 Juni 2019
Transcript of Demographic changes, migration and economic growth in the ...€¦ · Demographic changes,...
Demographic changes, migration and economic growth in the euro area
Axel Börsch-Supan • Munich Center for the Economics of Aging (MEA)
at the Max Planck Institute for Social Law and Social Policy (MPISOC), • Technical University of Munich (TUM) • National Bureau of Economic Research (NBER) in Cambridge, Mass., USA
ECB Forum on Central Banking 2019, Sintra, Portugal, 17-19 Juni 2019
0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065
JapanChinaUnited States of AmericaEuro zoneSpainItalySlovakiaEstoniaFinlandIrelandLatviaLithuaniaGreeceMaltaPortugalSloveniaAustriaBelgiumFranceGermanyLuxembourgNetherlands
#(65+)/#(20-64)
1:2
1:5
PT
-100 -50 0 50 100
USA
3. Still rather high birth rate
2. Long-term low birth rate and high life expectancy
1. Sharp transition from babyboom to babybust
China
#(65+)/#(20-64)
0.35
0.4
0.45
0.5
0.55
0.6
0.65
0.7
0.7520
16
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
2052
2054
2056
2058
2060
All high
Mig=100
LifE=86.2
TFR=1.3
Baseline
TFR=1.7
LifE=83.7
Mig=300
All low
#(65+)/#(20-64)
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
Old
-age
dep
ende
ncy
ratio
Mig100 Mig200 Mig300 Mig 500 Mig1000 Mig_konst
Peak: 2.1mio Avg: 1.2mio
#(65+)/#(20-64)
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
Old
-afe
dep
ende
ncy
ratio
TFR1.3 TFR1.5 TFR1.7 TFR1.9 TFR2.1
20 years
45.0
50.0
55.0
60.0
65.0
70.0
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065
USA
France
China
Germany
Euro zone
Italy
Spain
Japan
Y = F(K,L) Y/N = f(K/N,L/N)
share(20-64)
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
2015 2020 2025 2030 2035 2040 2045 2050
Börsch-Supan, Härtl & Ludwig, AER, 2014
GDP/cap
Labor force/cap
representing the euro zone
OLG Model (2015=100%, net of productivity trend)
0.9
0.95
1
1.05
2015 2020 2025 2030 2035 2040 2045 2050
Wage
Return
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
2015 2020 2025 2030 2035 2040 2045 2050
Börsch-Supan, Härtl & Ludwig, AER, 2014
GDP/cap
Labor force/cap
representing the euro zone
OLG Model (2015=100%, net of productivity trend)
0.45 PP p.a.
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
2015 2020 2025 2030 2035 2040 2045 2050
OLG Model (2015=100%, net of productivity trend)
Börsch-Supan, Härtl & Ludwig, AER, 2014
GDP/cap
Labor force/cap
representing the euro zone
GNI/cap vs. representing ROW Cons/cap
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
2015 2020 2025 2030 2035 2040 2045 2050
International capital flows [%GDP] to
Invest
Repatriate
from
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
2015 2020 2025 2030 2035 2040 2045 2050
OLG Model (2015=100%, net of productivity trend)
GDP/cap
Labor force/cap
GNI/cap Cons/cap
Reform to increase LFP: 1. RetireAge + 2 2. EntryAge - 2 3. FemLFP = 90%
of maleLFP 4. Unemp=NAIRU
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Labor force/cap GDP/cap Cons/cap
Baseline
Baseline
Baseline
Reform
Reform Reform
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Labor force/cap GDP/cap Cons/cap
Baseline
Baseline
Baseline
Reform
Reform Reform
Backlash Backlash
Backlash
1. Ageing takes about 1/3 of growth in euro zone – still positive!
2. Higher capital intensity lets GDP/cap decline less than labor/cap
3. Foreign investment increases GNI/cap and thus cons/cap
4. Happens automatically (well....)
5. Moderate structural reform needs to (and can!) fill the remaining gap
6. Unless backlash effects are strong
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Rate
of r
etur
n
Germany
EU
OECD
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Rate
of r
etur
n
GermanyEUOECD
Current PAYG-DB pension system
Partial transition to FF-DC system
Mankiw-Weil (1989) housing market: 47%
0.94
0.96
0.98
1
1.02
1.04
1.06
1.08
1.1
25 30 35 40 45 50 55 60 65Prod
uctiv
ity (i
nver
se s
ever
ity-w
eigh
ted
num
ber o
f err
ors)
Age
4.8 mio output measurements 1.2 mio error measurements 0.00
0.50
1.00
1.50
2.00
2.50
20 25 30 35 40 45 50 55 60 65Pr
oduc
tivity
(tas
ks p
er u
nit t
ime)
Age
0
10
20
30
40
50
60
70
80
90
60 61 62 63 64 65 66 67 68 69
Selbsteinschätzung gut, sehr gutoderausgezeichnet [inProzent]
Keine Funktions-einschränkung [inProzent]
Greifkraft [in kg]in orangeSchwankungs-breite
Self-assessed health: Percent excellent, very good, good Functional health: Percent without any limitation Physical health: Grip strength [kg] with 95% confidence interval
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
Infla
tion
Year
Germany
Inflation Size effect Structure effect
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
Infla
tion
Year
France
Inflation Size effect Structure effect
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%19
90
1994
1998
2002
2006
2010
2014
2018
2022
2026
2030
2034
2038
2042
2046
2050
Infla
tion
Year
USA
Inflation Size effect Structure effect
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
Pric
e ch
ange
s Year
China
Inflation Size effect Structure effect
1. While all countries age, timing, speed and extent are very different across countries
2. Negative impact on growth is partially dampened by endogenous reactions (higher capital intensity, more foreign investment)
3. Moderate structural reforms need to (and can!) fill the remaining gap
4. Declining health and productivity do NOT prevent such reforms for the average worker
5. Ageing-induced deflation effects strongly depend on demographic characteristics of a country
-20%
0%
20%
40%
60%
80%
100%
120%
140%
25 30 35 40 45 50 55 60 65 70 75
Savi
ng ra
te
Age
Italy
France
Germany
NL
