Wednesday, August 02, 2006

The Demographic Transition

Ben Bernanke and the Coming Demographic Transition

Ben Bernanke's speech yesterday should prove interesting for all readers of Demography Matters. The speech is interesting not so much for his views on the US social security system as such, but for the way he conceptualises the problem. This IMHO is a huge step forward. We are in the midst of an ongoing demographic transition. Here are some extracts:

The Coming Demographic Transition: Will We Treat Future Generations Fairly?

In coming decades, many forces will shape our economy and our society, but in all likelihood no single factor will have as pervasive an effect as the aging of our population.

This coming demographic transition is the result both of the reduction in fertility that followed the post-World War II baby boom and of ongoing increases in life expectancy. Although demographers expect U.S. fertility rates to remain close to current levels for the foreseeable future, life expectancy is projected to continue rising. As a consequence, the anticipated increase in the share of the population aged sixty-five or older is not simply the result of the retirement of the baby boomers; the "pig in a python" image often used to describe the effects of that generation on U.S. demographics is misleading. Instead, over the next few decades the U.S. population is expected to become progressively older and remain so, even as the baby-boom generation passes from the scene. As you may know, population aging is also occurring in many other countries. Indeed, many of these countries are further along than the United States in this process and have already begun to experience more fully some of its social and economic implications.
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The Demographic Transition

The 21st century will doubtless bear witness to a great many new and strange phenomena, but somewhere high up on the list of things which defined the century will surely be the fact that most countries experienced a substantial and sustained ageing in their populations as the century progressed. This population ageing is the result of both a general decline in birth rates and a sustained and substantial increase in levels of life expectancy. In the developed world birth rates will in all likelihood continue to sustain below replacement levels of fertility (with 'just how low can you go' being still very much an open question) whilst the developing countries are, and will continue to be, in the process of dropping from high to moderate and then eventually to low, or even extremely low, fertility levels.
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Rethinking the Demographic Transition

It was the late Imre Lakatos who used to argue that the important question to ask about any research program was whether it was in its progressive or in its degenerative stage. For Lakatos a progressive research program was characterised by growth and the discovery of new and interesting facts whilst a degenerative one was marked by a lack of growth, and by an excessive increase in what he termed the "protective belt" which surrounds the program, and in particular a degenerative programme is one which finds itself continually forced to respond to an ever-growing list of counter-examples and nuances (Lakatos,2000.1976, 1970). On this view auxiliary hypotheses finally end-up being tacked-on to the original theory in an increasingly adhoc-ocratic fashion. At some stage in the process a turning point is reached where it becomes on-balance more and more interesting to abandon the old and break-open the new. What has all of this got to do with demographic transition theory, well, I think posing the question is already, at least in part, to answer it.
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Bo Malmberg's Theory Of Stages

The Swedish demographer Bo Malmberg has proposed a four-phase typology of the demographic transition which may be considered to be a useful contribution to our understanding of the age structure impacts of the ongoing processes of social and economic evolution which accompany the demographic transition (Malmberg and Sommestad, 2000).

The modern demographic transition has, of course, had a substantial influence on both population-size and population growth-rates over the last two centuries, and it is probably this aspect of the transition more than any other which has grabbed the popular attention, at least until very recent times. Less well appreciated and less well publicised, however, has been the fact that the impact of the transition on the age structure of populations has been equally strong and significant. It is this age-structure dimension which Bo Malmberg, more perhaps than any other demographer, has thought about and has attempted to capture theoretically.

Impacts on age structure tend to be more extended in time than their more dramatic size-impact equivalents, and indeed one might claim that the whole process of the demographic transition in-and-of itself is best thought of as an extended and continuous process of age-transition. This is Malmberg's principle insight.
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