Demographics, Economics and Social Choice ADAIR TURNER November 6, 2003 R:\Live Files\IBK...

TurnerSlidesR:\Live Files\IBK Management\Inbox\ADAIR TURNER\ln000rsm.ppt 06/11/2003 10:25:00 (*)
DRAFT
ADAIR TURNER
R:\Live Files\IBK Management\Inbox\ADAIR TURNER\ln000rsm.ppt 06/11/2003 10:25:00 (*)
DRAFT
CONFIDENTIAL
Presentation to The Economist
Three Dimensions of Demographic Change
Increasing Longevity
Declining Fertility
Life Expectancy at Birth(1) - Male
____________________
Source: GAD for UK; United Nations for World
Note: These are “Period” Life expectations, which actually underestimate the expected life span of a baby born in the year specified, but which are easier to calculate than the correct “cohort” figures and therefore frequently used in international comparisons. See footnote x in lecture text for explanation
DRAFT
CONFIDENTIAL
Life Expectancy at 60(1) - Male
____________________
Note: On “Period” basis
Total Fertility Rates – Europe and North America 1950-2000
____________________
Source: United Nations
In chart minimum value in y axis is 0.5 and crosses at 0.75
In PowerPoint a white fill box has been used to blank out the 0.5
Chart
Total Fertility Rates – Asian Countries 1950-2000
____________________
Source: United Nations
In chart minimum value in y axis is 0 and crosses at 0. 5
In PowerPoint a white fill box has been used to blank out the 0
DRAFT
CONFIDENTIAL
Total Fertility Rates – Iran, Turkey, Brazil, 1950-2020
-55
-65
-75
-85
-05
-95
-15
-25
2020
1950
In chart minimum value in y axis is 0 and crosses at 0. 5
In PowerPoint a white fill box has been used to blank out the 0
1950 and 2020 are text boxes in PowerPoint with a white fill
DRAFT
CONFIDENTIAL
From Pyramids to Columns
P.A.Y.G. Pension Systems: Key Ratios
No population
Average worker contribution
=
=
Demographic Drivers of Support Ratio
“Support
Ratio”
Support Ratio Dynamics
Ratio of Workers to Retirees, Assuming Working From Age 20
Population Growth % p.a.
Support Ratio Forecasts 2000-2050
____________________
P.A.Y.G. Schemes: Three Alternatives
If support ratios for any given retirement ages fall, then three possible solutions
Increased retirements ages
Support Ratio Dynamics under Different Demographic Challenges
Increase in longevity - no change in fertility
Support ratio effect can be fully offset by proportional rise in retirement age
Decline in fertility in addition to increase in longevity
Proportional rise in retirement age insufficient to offset support ratio effect
DRAFT
CONFIDENTIAL
Population Growth Rate % p.a.
Are Funded Systems Different?
In any pension system today’s pensioners are dependent on resource transfer from today’s workers
Funded systems only help overcome demographic challenges if they increase savings – in current and future generations
Funded systems face demographic risks
The implications are closely similar for funded and non-funded systems
DRAFT
CONFIDENTIAL
Demographic Change in UK and China – UN Medium Variant
% Population by Age Band
running from 0% to 100%.
To achieve the appearance
one containing the ‘real’ data
Blank values of equal amounts
are put in either side (with the
colours changed to white),
and the whole row
adds up to 100
(see screen dump right).
re-coloured manually .
60+
15-59
Demographic Conditions and Investment Attractiveness
____________________
TFR Below 2.05 Today
TFR in 2015 – 2020*
Immigration Only Responses – UN Migration Scenario
To maintain the ratio of 15-64 year olds to 65+ year olds constant requires:
Total Population – Millions
Rising Longevity, Fixed Retirement Age and Stable Support Ratios
Initial Structure
Retirement
Age
DRAFT
CONFIDENTIAL
Population Growth % p.a.
Europe and Its Neighbours – Population
____________________
European
Union
Western
Asia*
Africa
Eastern
Europe
Russia,
Ukraine
& Belarus
Millions
DRAFT
CONFIDENTIAL
Population Density – US and Europe
____________________
Demographics and Geopolitical Weight
Italy’s Population Structure 1970-2050
Age Band
Millions
1970
2000
2050
DRAFT
CONFIDENTIAL
Fertility Intentions of Women
21-23
2.16
24-26
1.98
27-29
2.02
30-32
1.97
33-35
1.97
36-38
1.90
DRAFT
CONFIDENTIAL
European Fertility Rates - 2001
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
+0.5 3.5 2.8
Zero 3.0 2.25
Retirement Age 65 65
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
China Brazil Algeria Bangladesh
Korea Indonesia Argentina Congo
Russia Iran Chile Egypt
Thailand Mexico India Iraq
Ukraine Turkey Morocco Kenya
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
USA
Europe
0
45
50
55
60
65
70
75
80
1910192019301940195019601970198019902000
0
45
50
55
60
65
70
75
80
UK
World
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
USA
Europe
0
45
50
55
60
65
70
75
80
1910192019301940195019601970198019902000
0
45
50
55
60
65
70
75
80
UK
World
0
45
50
55
60
65
70
75
80
1910192019301940195019601970198019902000
0
45
50
55
60
65
70
75
80
UK
World
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0
15
16
17
18
19
20
21
France
UK
0
15
16
17
18
19
20
21
0
15
16
17
18
19
20
21
France
UK
0
15
16
17
18
19
20
21
19601970198019902000
0
15
16
17
18
19
20
21
France
UK
0
1
2
3
4
5
6
7
8
19501960197019801990200020102020
0
1
2
3
4
5
6
7
8
Iran
Turkey
Brazil
0
1
2
3
4
5
6
7
8
19501960197019801990200020102020
0
1
2
3
4
5
6
7
8
Iran
Turkey
Brazil
0
1
2
3
4
5
6
7
8
19501960197019801990200020102020
0
1
2
3
4
5
6
7
8
Iran
Turkey
Brazil
+
+0.5 3.5 2.8 3.53
Zero 3.0 2.25 3.0
Retirement Age 65 65 68.75
205
141
2050
2000
205
141
2050
2000
205
1412050
2000
25
65
10
19
60
21
16
54
30
16
54
30
0.8
5.1
7.4
8.9
5.8
1.5
6.5
7.6
8.6
5.5
MaleFemale
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
China
Korea
0
1
2
3
4
5
6
7
China
Korea
0
1
2
3
4
5
6
7
China
Korea

Demographics, Economics and Social Choice ADAIR TURNER November 6, 2003 R:\Live Files\IBK...

Documents

Transcript of Demographics, Economics and Social Choice ADAIR TURNER November 6, 2003 R:\Live Files\IBK...