Forecasting global growth by age structure projections

Demographic projections of age structure provide the best information available on long-term human resources and demand. In current data fairly robust correlations with GDP and GDP growth have been discovered. In this paper we use these two facts and study the forecasting properties of demographically based models. Extending the forecasts to 2050 suggests that due to fertility decreases poor countries of today will start to catch up with developed economies in which the growth process will stagnate due to the growth of the retired population.Global growth; age structure

Demography and housing demand - What can we learn from residential construction data?

There are obvious reasons why residential construction should depend on the population’s age structure. We estimate this relation on Swedish time series data and OECD panel data. Large groups of young adults are associated with higher rates of residential construction. But there is also a significant negative effect from those above 75. Age effects on residential investment are robust and forecast well out-of-sample in contrast to the corresponding house price results. This may explain why the debate around house prices and demography has been rather inconclusive. Rapidly aging populations in the industrialized world makes the future look bleak for the construction industry of these countries.demography; housing demand

Swedish fertility swings and public expenditure for children

This paper studies whether Swedish fertility swings and variation in public expenditure for children are related events. In the 1930s Swedish birth rates had fallen to levels close to the death rates and in public discourse this was perceived as a major social and national crisis, spurring a range of social policy reforms. While total fertility rates in Sweden have varied over large spans the completed cohort fertility rates are almost constant around 2 children per woman for women born in the 20th century. Using unique data for the years 1930-1997 on public expenditure per eligible child for schools, child allowances and child care we estimate age-specific fertility for broad age groups as a function of these variables. The results indicate that the age group 25-29 is most sensitive to variations in this public expenditure thus providing a tentative explanation of the swings in period fertility in terms of policy induced tempo variation. School expenditure is negatively correlated to fertility while child care and child allowance is positively correlated. This pattern is consistent with a quantity-quality trade-off by the parents. To check the predictive power of the model we use data from 1998-2007 and get an excellent prediction of the fertility turn-around after 1999 for all age groups except 35 and above where we tend to under-predict at the 10-year horizon. Further research along these lines is needed to uncover the causal mechanisms of these very stable correlations.Fertility; Children expenditure; Fertility factors; Sweden; Demography

Age Distributions and the Current Account -A Changing Relation?

In recent research age distribution effects on the current account have been found in cross-country panel regressions. The reason is different effects on saving and investment from cohort-size variation. In a panel of annual OECD data 1960-1995, we find that the age effects on saving are similar to results on world samples but the effects on investment are very different. The respective age profiles of saving and investment are much more similar in the OECD sample. This may be one factor accounting for the home-country bias found in international capital markets. Disaggregating investment we find that young cohorts have a positive correlation with housing investment while older but still active cohorts have a positive correlation with business investment. The differences in saving and investment effects are, nevertheless, sufficient to generate persistent and sizeable age effects on the current account. Our results suggest that policies concerning current account balance should take into consideration age distributions and the degree of development.age distribution; home-country bias; saving; investment; current account; OECD

Demographically based global income forecasts up to the year 2050

Demographic projections of age structure provide the best information available on long-term future human resources and demand. In current data fairly robust correlations between age structure and GDP and GDP growth have been discovered. In this paper we use these two facts and study the forecasting properties of demographically based models. Extending the forecasts to 2050 suggests that due to fertility decreases poor countries of today will start to catch up with developed economies in which the growth process will stagnate due to the growth of the elderly population. That remains the case whether or not indications of positive longevity effects are taken into account.demographic projections; global income; long-term forecasts

Low fertility and long run growth in an economy with a large public sector

There is plenty of evidence that growth has a negative relation to fertility and dependency ratios. Recently it has been suggested that low fertility countries may be caught in a trap that is hard to get out of. One important mechanism in such a trap would be social interaction and its effect on the ideal family size. Such social interaction mechanisms are hard to capture in formal models, therefore we use an agent based simulation model to investigate the issue. In our experimental setup a stable growth and population path is provoked into a fertility trap by rising relative child costs linked to positive growth. Even rather large increases in child benefits are then insufficient to get out of the trap. However, the small number of children temporarily enables the economy to grow faster for several decades. Removing the adaptation of social norms turns out to disarm the trap.low fertility trap; social norms relative income; economic growth

Simulating the Future Pension Wealth and Retirement Saving in Sweden

In this paper the wealth consequences of the Swedish pension system in the transition from a defined benefit to notional defined contribution system are simulated with almost exact institutional detail, using life cycle profiles estimated from detailed longitudinal micro data. Projected wealth, including different types of pension wealth, are computed and compared between cohorts, gender, wealth deciles and occupational categories. Consistent saving rates and replacement rates allowing consumption to stay constant after retirement are computed. Two different macroeconomic scenarios are considered, one using stylised values for growth, inflation etc. and another using demographically based forecasts. Some conclusions are that the cohorts born in the 1940s are relatively favoured, and so are the wealthiest deciles. Stylised macro assumptions yield more optimistic wealth projections than those corresponding to demographically based projections.Future Pension Wealth; Retirement Saving in Sweden

Study achievement for students with kids

In this paper we explore the composition of students, the study length towards diploma, and examine the likelihood of diploma, all with respect to parenthood. Few get children while enrolled in higher education, nevertheless one fourth of female university students in Sweden has children. In Sweden as in many other countries enrollment periods have been prolonged and allocated to later parts of life. Using a large longitudinal register micro data set containing educational achievement we find that students with children seem to be somewhat more efficient in their studies among those who have graduated. Becoming parent speeds up ongoing studies but not studies that are initiated after entry into parenthood. We also find an indication that students with children have a lower dropout rate since their probability to register a diploma is higher, compared to students without children.Students; parenthood; education; study interruption

Study achievement for students with kids

In this paper we explore the composition of students, the study length towards diploma, and examine the likelihood of diploma, all with respect to parenthood. Few get children while enrolled in higher education, nevertheless one fourth of female university students in Sweden has children. In Sweden as in many other countries enrollment periods have been prolonged and allocated to later parts of life. Using a large longitudinal register micro data set containing educational achievement we find that students with children seem to be somewhat more efficient in their studies among those who have graduated. Becoming parent speeds up ongoing studies but not studies that are initiated after entry into parenthood. We also find an indication that students with children have a lower dropout rate since their probability to register a diploma is higher, compared to students without children.Students; parenthood; education; study interruption

Intergenerational public and private sector redistribution in Sweden 2003

We describe intergenerational redistribution in Sweden the year 2003. The high Swedish tax ratio of around 50-60 percent of GDP per capita is partly explained by every individual getting a lot back in terms of transfers and part in government consumption. Another reason is that most transfers are taxed, which results in double counting some tax payments. Here we attempt to correct the age profile of net tax payment for these effects and compare these to the gross profiles. On a per capita basis we find, using this netting, that the mean age of tax payers drops from 55 to 48 and that the taxes paid falls by 23.2 percent. We also look at age profiles of private and public consumption, and net private consumption, i.e., the difference between private disposable income and private consumption. We find that private net redistribution flows mainly from middle and old age to young ages, while net public transfers flow to both young and old.Intergenerational; redistribution