Demographics

Final Exam

• ECON2000 L1 21-Dec-12 8:30-11:30 LTB• Cumulative• Bring: Writing materials, calculator, 1 A4 size

piece of paper with handwritten notes on both sides

• Office Hours WR 11-12 Dec. 19-20

Global ImbalancesLink

Savings &Current Account

• Gross National Savings: GNI – Consumption (Publ. + Private)

• GDP = Consumption + Gross Capital Formation + Net Exports (Exports – Imports)

• GNI = GDP + NFI• GNS – GCF = NX + NFI = Current Account

Population Growth

• Abstracting from migration, population growth rates equal crude birth rates less crude death rates.

11

.POP t t t tt

t t

Pop Pop Births Net Migr Deathg

Pop Pop

The Classic Demographic TransitionModel

Stage 1 Stage 2 Stage 3 Stage 4

Time

Naturalincrease

Birth rate

Death rate

Note: Natural increase is produced from the excess of births over deaths.

Link

Stages of Demographic Transition

1. Low Population Growth. High Birth Rates, High Death Rates

2. Population Growth Explosion. Medical Advances slow mortality rates, high population growth.

3. Slowing Population Growth. Educational Advances slow birth rates.

4. Low Population Growth. Low Birth Rates, Low Death Rates

19601963

19661969

19721975

19781981

19841987

19901993

19961999

20022005

20080

5

10

15

20

25

30

35

40

45

50

Korea Demographic Transition

Death rate, crude (per 1,000 people)Birth rate, crude (per 1,000 people)

Axis Title

World Development Indicators

Japan

1950 1960 1980 2000 2005 2010 2015 2020 2040 2060 2080 21000

5

10

15

20

25

Final Stage of Demographic Transition

Birth RatesDeath Rates

per 1

000

World Population Prospects, the 2010 RevisionVolume II – Demographic Profiles Link

Aging Population Structure

0 - 4 9-May

14-Oct

15 - 19

20 - 24

25 - 29

30 - 34

35 - 39

40 - 44

45 - 49

50 - 54

55 - 59

60 - 64

65 - 69

70 - 74

75 - 79

80 - 84

85 - 89

90 - 94

95 - 99

100 +

0

2000000

4000000

6000000

8000000

10000000

12000000

Age Distribution Japan

201019901970

Peop

leLink Population by age, sex and urban/rural residence

Japanese Population

1950 1960 1980 2000 2005 2010 2015 2020 2040 2060 2080 210080

85

90

95

100

105

110

115

120

125

130

Population

Mill

ions

of P

eopl

e

Fertility Rates

Country 15-19 20-24 25-29 30-34 35-39 40-44 45-49

Japan 1.27 5 36 82 86 38 5 0 1.26795

Total fertility

Age-specific fertility rates

Longer-term ratio of average number of children• Replacement Ratio: 2.1 Developed Economy, 2.3

Developing Economy

Fertility Rates

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100

1

2

3

4

5

6

7

8

High income: OECDEast Asia & Pacific (all income levels)Arab WorldLatin America & Caribbean (all income levels)Sub-Saharan Africa (all income levels)

Imbalances

Life-cycle hypothesis – Households prefer smooth spending growth

Consumption Spending

Earnings

$

Age

Prime Saving Years

Population Structure and Employment

19561958

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

46.00%

47.00%

48.00%

49.00%

50.00%

51.00%

52.00%

53.00%

54.00%

Japan: Employment to Population Ratio

Implications of Age Structure for Economic Growth

• Temporary high savings and high investment.• Period when investment drops more quickly

than savings: savings glut, global imbalances.• Low interest rates. • Less innovation