Tuesday, June 27, 2006

US Demography: A Tale of Two Pyramids?

by Edward Hugh

I've already made a number of attempts here to try and get a better understanding of the dynamics behind US demography. This was an early attempt, where I try and link the rebound in the TFR that can be seen from the mid 70s to the start of modern-era large-scale immigration together with the slowing down in the birth postponement process in the US 'majority' population and the consequent 'recovery' of missing births (this process has also been noted in a number of societies in North Western Europe). The rebound can be clearly seen in this graph:

I also gave some suggestions as to why the current near replacement fertility reading may be less stable than some suggest due to the continuing decline in teenage pregnancies, and the steady displacement upwards in mean age at first birth. Both these indicators would suggest that a second 'tempo effect' movement downwards in aggregate US TFRs is to be anticipated.

More evidence that the US fertility profile may be less stable than many assume comes from looking at the fertility behaviour of the recent migrant population. Now as this article explains, the U.S. Hispanic population, which accounts for only 14 percent of the US population, was responsible for a staggering 49.2 percent of the population increase four-year population increase in the US over the last four years.

Even more to the point are the so-called 'vital statistics' — the ratio of births to deaths — of the two main population groups. The vital index for white non-Hispanics is 1.2 (approximately one birth for every death), while among Hispanics the figure is 8.2 — approximately eight births for every Latino death. This disparity is the result of the considerable differences in age structure and fertility between the groups.

A quick comparison of two population pyramids (the white non-hispanic one and the hispanic one may make this clearer). Here is the while non-hispanic pyramid:

It looks, as the prb article notes, pretty much like many of the European pyramids. Now here is the hispanic one:

So with a current TFR of 2.8, and a legalisation and stabilisation process now about to happen, and roughly the same wish as anyone else to get healthy, wealthy and wise, my guess is that the global hispanic TFR is now set to fall, and set to fall rapidly. So while in relatively discrete (and statistically not especially important) settings like Idaho and Utah, white non-hispanic fertility may be notably higher than average for religious or other reasons, it is far from clear that ideational forces will maintain the US population long outside the socio-economically driven global trends.

Sunday, June 18, 2006

Mating Dilemmas

by Edward Hugh

Recently I have been reading a lot of material about allocative decision processes coming from a branch of evolutionary anthropology known as Life History Theory (this is a reasonable summary paper). Now essentially life history theory is about the allocation of somatic energy resources to various competing demands (namely maintenance, growth and reproduction) in a way which has suprising parallels with the ways in which economic science tries to study how we take behavioural decisons between competing demands under similar resource constraints. Well, as I say I have been think about all this a lot, and then Lo and Behold:

Japan’s notoriously hard-working salarymen are being given a chance by the government to cut their hours in a bid to improve their health – and their fecundity.

Workers who put in more than 40 hours of overtime a month will earn the right to an extra day off the next month, according to a policy paper prepared by the Ministry of Health, Labour and Welfare.....

The problem of overwork is particularly severe among men in their 30s, the ministry says. About a quarter work more than 60 hours a week, according to official figures, though the real number may be higher.
The Labour Consultation Centre, a non-profit organisation, takes many calls from both men and their wives complaining about overwork. Husbands grumble that they do not see their home for a week, says Ari Sugano, secretary-general.
Wives say they worry that their husbands might suffer “karoshi”, a word coined during Japan’s economic miracle that means “death from overwork”.
This leaves Japan’s 30-something male with little time to think of other things – such as starting a family. It is small wonder, then, that Japan’s birthrate, at only 1.25 per woman and falling, is among the world’s lowest.
The government plans to change this, with a better balance between work and leisure. “If a man has time off he can do whatever he wants,” says Shinichi Akiyama, a research officer at the ministry who has worked on the proposals. “He can find a girlfriend, he can go out for dates, he can share in raising a child.”
Now lets leave on one side for the moment that such headline seeking proposals will do little if anything to change Japan's lowest-low fertilty profile, and concentrate instead on the conceptual issues this way of looking at things raises. In life history terms the Japanese government seems to have decided that individual Japanese males are devoting too much time and energy to growth and maintenance processes, and insufficient time and energy to mating. In this sense, they might be suggesting that the Japanese male is not being 'fully rational' since he is not taking into account the evident negative externalities of people not having children.

Is it possible to use this LHT classificatory schema in terms of strategic economic decision taking? Well we could just have a try.

Maintenance: this is esentially what we do every day. It is the expenditure of time and energy which enables us to get through to tomorrow. This operates on a number of levels. Existentially it could mean watching a film, to 'disconnect'. Physiologically it could mean exercise, time at the gym or something, or it could mean work being done by our immune system, or lying in bed to recover from a cold. The trade-off between growth and maintenance could be considered in terms of decisions about whether or not to go to work when we are 'under the weather'. We may put increased demands on our body in terms of long term maintenance costs in order to achieve some other objective like growth (which could even be understood here in much more general terms like growth in our own self respect).

Growth: well in childhood and adolesence this has a fairly simple and literal interpretation. But there is a much more general idea of growth, like personal growth and development. Going on courses, reading books, anything which enhances our self-image of ourselves as persons, and of course anything which enhances our economic value. This latter could also be thought of in terms of wealth, and the accumulation thereof, whether in terms of assets or of consumer products, whatever.

Reproduction. Well lets call this mating, since not everyone reproduces. But nearly all humans do try to engage with mates at some stage or other in their lives. So it is not normally something which we sit back and think about, whether we want to find a mate or not, we just meet someone, something happens, etc etc. And this process is then terribly energy consuming, and detracts resources from both maintenance and growth as we all probably know. Of course there may also be 'search costs' as we may decide at some point to invest time and energy in actively looking for a mate. And there is also a lot of time and energy consumption here. But I'm not sure that people actually rationally plan this in a precise trade-off evaluation with say growth or maintenance. People just do it, because it fulfils a need. Of course some people are more concerned with this than others.

And then there is the actual partnership formation part. This is another enormous investment of time and resources in something which doesn't always (in fact more frequently doesn't than does) work-out as initially planned. Then there is the decision about whether or not to have children. As David Coleman points out somewhere, from strictly economic point of view it is hard sometimes to understand why people have children at all, since in many ways they are all cost. But OTOH we do normally want to have children at some level or other, and when people don't it is interesting to investigate why they don't. The decision has normally been, at least until very recently about how many to have, and when to have them, not about whether.

Of course this is just what I said it was, a classificatory schema (or taxonomy of decision types if you will). It doesn't mean to say that we actually function in this way, just that it might help us think about the classes of decision that we take, and in that sense make us better able to analyse our decision making processes. And of course, there *are* spillover externalities, like from falling in love. When we are in a process of requited love we may not only have resolved (at least temporarily) the mating issue, we may also be happier, be more efficient in covering maintenance needs, and grow more quickly. This takes us back to the Japanese government, and what they had in mind when they suggested eveyone took a day off: maybe it was this.

The demise of Russia's far east

The Demography.Matters team has on several occasions reported on the demographics of Russia and this time around we look at the differences between east and west of the large country. At first hand, it seems as if the demographic issues in Russia could be narrated in a general sense.

'For more than a decade, the country's population has steadily shrunk from 150 million in the early 1990s to just more than 140 million today. According to official statistics, unless the situation changes, the Russian population will drop to 80 million by 2050, leaving the country's Far East virtually vacant.'

However, particularly the remote far eastern regions are being abandoned in what seems to be a flow of migration towards the west which obviously is set to have important consequences should the trend not be reversed.

'Russian officials concede that the country's Far East risks becoming a no man's land. The population in the area has declined by 20 per cent in the last 15 years, despite a revival of the regional economy, Kamil Iskhakov, the presidential envoy to the Far East said on in mid-May. "People are leaving because they can not find acceptable living conditions," he told an 18 May meeting in Khabarovsk.

Improving the demographic situation is a "matter of survival" for the Koryak Autonomous District, said governor Oleg Kozhemyako. The region still faces high mortality rates and significant population outflows, he conceded on 10 May.'

And this should be seen in the light of a especially well endowed territory which, at least at a first glance, bodes well for opportunities.

'The Russian Far East comprises 13 regions, stretches over 40 per cent of Russia's territory, and is home to vast natural resources, including virtually all of the country's diamonds, two-thirds of its gold deposits, and major timber and fishery resources.

Yet despite these opportunities, in recent years many Russians have been moving back to the European part of the country from the remote regions of Siberia and the Far East. As such, Russia's expansionist trend of the past several centuries is being reversed, leaving hardly populated stretches in the Asian part of the country.'

As the article also reports, Kremlin is hard at work to reverse the demographics trends in Russia and specifically the Eastern regions, will Moscow come through?

Wednesday, June 14, 2006

Ireland's Debt Rating Under Threat?

by Edward Hugh

Hi everyone. I've been away for a time. Basically deep in thought, trying to sort out some long-standing puzzles. They still aren't properly sorted-out, but I am coming back to blogging even while I continue to struggle. As a warm-up issue this piece in the Financial Times caught my eye:

"The ageing Irish population is threatening to put severe pressure on the country's public finances and its AAA credit rating, Standard & Poor's, the rating agency, warned on Tuesday.....

S&P said Ireland needed to put into effect concerted policy and fiscal reforms to avoid a deterioration of its public finances stemming from rises in age-related spending. Without them, Ireland's credit rating could head into the "junk" or sub-investment grade in the next couple of decades."

Now I think we can leave aside the issue of how S&P have arrived at their specific assessment, or how realistic the scenario they were running actually is. I think what is news here is the fact that Ireland - which used to be Western Europe's fertility 'champ' - is now about to face the ageing consequences of a rapid fertility decline. Of course, in the short term, fiscal measures are available to bring this back to some sort of order, and it isn't the end of the world, or anything like that. But it is worth noticing that it is happening, and that Ireland used to be one of the typical 'anglo' fertility societies (with the US and the UK), characterised by high levels of teenage pregnancy, which many thought would provide an 'anchor' against upward displacement in average first birth age. I do think there are lessons for the US in what has happened in Ireland, and I do wish more people would start to draw them.

On another front the FT also has a piece today (subscription only unfortunately) which explains how Japanese politicians are desperately looking for ways of turning round their 'baby bust' situation. Apart from the fact that it is now a little late in the day for this (Japan went below replacement fertility in 1975, so its a bit like rushing to put the fire out after the building has burnt down), what strikes me is the way so many people still seem to find all this news.

Monday, June 05, 2006

Japan revisited

The Japanese economy has certainly been a source of mixed signals since the BOJ decided to end the ultra-loose monetary policy and thus claimed to have ridden themself with the ugly beast of deflation. This subsequently prompted powerful opinion makers such as The Economist and the FT to hail Japan as an awoken tiger ready to take on the rest of the world.

For an overview of the flurry at the time see this post by Edward as well as these two from Alpha.Sources. More generally you should also go see this aggregated blog of all Edward's posts on the Japanese economy. As you can see by following the links above the members of this team were somewhat sceptical about this sudden change of fortune for Japan and recently it seems as if the declining population and the subsequent demographic outlook for Japan has gotten due attention from some of the initial optimists (Economist article walled for non-subscribers).

(From the Economist)

"Early this month came news that Japan’s fertility rate (the average number of children a Japanese woman bears in her lifetime) fell last year to a record low of 1.25. It was, said the prime minister, Junichiro Koizumi, “an extremely tough figure”. Demographers had hoped that the fertility rate would bottom out at over 1.3, compared with a population replacement rate of 2.1, seen last in the early 1970s. Last year, too, the population saw its first decline in peacetime since records were kept. The government predicts that the Japanese population of nearly 128m will fall to just over 100m by the middle of the century. Nothing less than national survival, the Yomiuri Shimbun newspaper despairs, is at stake.

Some blame the demise of the traditional omiai, or match-maker: in the mid-1960s love matches overtook the number of arranged marriages for the first time, but now women want to get married later or not at all. Politicians, hitherto shy of sounding like wartime propagandists, are now urging women to breed. The government’s trade ministry even promotes the computer-dating industry. One of the biggest firms, Zwei, whose brochures are full of soft-focus idylls of white weddings, says its research shows most single people under 45 do not remain unmarried by choice. Rather, busy professionals simply haven’t found the right partner. Zwei and others are happy to help.

It is anyone’s guess when the fertility rate will turn up. For now, though, what matters is not so much a falling population but a change in its mix. Since the second world war, average life expectancy has jumped by 30 years, to 82. After the war, just 5% of Japan’s population were over 65. Today, the proportion of elderly, at 20%, is the highest in the world. By 2015, one in four of all Japanese, or 30m, will be over 65. Less remarked is a coming sharp decline in the number of younger workers: over the next decade, for instance, the number of Japanese in their 20s will fall by 3m, to 13m. It means that by 2030, there will be only two workers for every retired person, and three workers for every two retirees by mid-century. The Labour ministry estimates the workforce is shrinking by 0.7% each year."

Troublesome reading indeed.