I'd like to thank Crooked Timber's Chris Bertram for pointing to a detailed rebuttal of the latest Eurabian tome, Reflections on the Revolution in Europe. Matt Carr's "Christopher Caldwell Dissected"
At first sight it may seem odd that a senior editor of the neoconservative Weekly Standard and an admirer of Enoch Powell should receive such acclaim from such bastions of British liberalism. So what makes Caldwell different and why has his book managed to transcend the conservative/right-wing readership that the 'green peril' sub-genre normally attracts? Firstly, there is his approach to the issues he raises. Unlike Fallaci and Mark Steyn, Caldwell does not rant or sneer. He presents his book as an objective and judicious discussion rather than a polemic, and avoids conspiratorial explanations for Muslim immigration of the type made by Eurabian theorists like Bat Ye'or. His arguments are measured, thoughtful and nuanced, and considerably more sophisticated than the rantings of Melanie Phillips. His authorial persona is that of a puzzled and concerned observer of the European predicament, driven only by a willingness to consider all angles of a serious debate that others are ignoring. He is cultured and knowledgeable.
For all these qualities, there is virtually nothing in his book that would be out of place in any other examples of the 'green peril' genre. Caldwell's essential argument is that Enoch Powell's predictions have been proven to be mostly correct and that European elites naively - and unnecessarily - entered into a new era of mass immigration after World War II, without thinking through its long-term consequences. As a result they have paved the way for the implantation of a Muslim 'adversary culture' in the heart of Europe that now threatens to engulf the continent demographically, culturally, politically and even sexually. To support this thesis, Caldwell roams back and forth across the continent, combining first-hand reportage with a formidable accumulation of statistics and opinion polls from different countries. All the essential elements of Islamic threat narratives are here; the empty church pews versus burgeoning mosques; Europe's decadence and crisis of spiritual values versus the confidence and power of Islam; the dire warnings of an ageing Europe that is being out-bred by more virile and fertile Muslim immigrants; the failure of multiculturalism and the subsequent proliferation of parallel societies and 'ethnic colonies' characterised by female circumcision, honour killings, criminal violence and terrorism, gang rape and the oppression of women.
[. . .]
n Caldwell's estimation, Europe's misguided promotion of multiculturalism is a consequence of a self-loathing and loss of confidence that extends to religious, cultural and even sexual matters. Not only do Europeans no longer believe in anything, but immigration has made them feel 'contemptible and small, ugly and asexual'. Little evidence is offered to prove this ridiculous generalisation, beyond a few quotes from the misanthropic French 'post-humanist' novelist Michel Houllebecq and others. But Caldwell clearly likes to have his Eurabian cake and eat it. If Europeans are asexual and unconfident compared with the more virile immigrant hordes, they are also having too much of the wrong kind of sex, in societies marked by 'the pierced navel, online gambling, a 50 per cent divorce rate, and a huge rate of anomie and self-loathing'.
One minute Caldwell is suggesting that immigrants share a puritanical aversion to Europe's depraved sexual mores that might make them reluctant to integrate. The next he is explaining that 'Europe's Third World immigrants, and particularly its Muslims' might not undergo the 'same demographic transition that their Western hosts did' and have smaller families, because 'Muslim culture is unusually full of messages laying out the practical advantages of procreation'. One of these 'messages' consists of a verse from the Koran, the other is a quote from Yasser Arafat that the wombs of Palestinian women should be a 'secret weapon' against Israel.
Go read Carr's fact-based review, please.
Thursday, July 30, 2009
Wednesday, July 29, 2009
How many babies are Europeans actually having?
Some time ago I talked about how total fertility rates can be misleading when the mother's average age at birth is changing and that much how the recent apparent small increases in fertility is due to the the stabilization of the average age at birth rather than Europeans actually having more babies.
Obviously, I'm not the first one to discover this. Serious demographers have been aware of this for a very long time and there have been attempts to create what is called an Adjusted Total Fertility Rate, which as the name implies, tries to take into account changes in the timing of birth and derive a more accurate estimate of how many children people are actually having. Luckily, the good folks at the Vienna Institute of Demography publishes regularly a European Demographic Data Sheet which summarizes demographic data for European countries, including an adjusted total fertility rate, and is available here. The most recent edition, from 2008, includes this neat little map that shows very clearly part of what I was trying to say in that earlier post: European demography is not universally bad, there is a number of countries with relatively healthy fertility rates. (click to enlarge)
Having said that, the demographic situation in many countries is of course very serious. Excluding Turkey, only about a third of the European population live in countries with fertility rates approaching replacement (red and orange). For the EU as a whole the adjusted TFR is 1.72, better than the 1.53 the TFR would indicate, but in many countries, particulary Southern European ones, the situation is pretty dire.
At this point one should note that fertility isn't the only important indicator here. For instance, while adjusted fertility is higher in Germany than in Spain, Germany has had lower fertility for longer, leading to a higher median age and probably a worse situation overall, at least as of right now. Ditto for Estonia, which has both a high median age and suffers from emigration. Still, I think the adjusted TFR as shown in the map above does help you to get a more accurate demographic picture, as long as you keep in mind that there are other variables.
Obviously, I'm not the first one to discover this. Serious demographers have been aware of this for a very long time and there have been attempts to create what is called an Adjusted Total Fertility Rate, which as the name implies, tries to take into account changes in the timing of birth and derive a more accurate estimate of how many children people are actually having. Luckily, the good folks at the Vienna Institute of Demography publishes regularly a European Demographic Data Sheet which summarizes demographic data for European countries, including an adjusted total fertility rate, and is available here. The most recent edition, from 2008, includes this neat little map that shows very clearly part of what I was trying to say in that earlier post: European demography is not universally bad, there is a number of countries with relatively healthy fertility rates. (click to enlarge)
Having said that, the demographic situation in many countries is of course very serious. Excluding Turkey, only about a third of the European population live in countries with fertility rates approaching replacement (red and orange). For the EU as a whole the adjusted TFR is 1.72, better than the 1.53 the TFR would indicate, but in many countries, particulary Southern European ones, the situation is pretty dire.
At this point one should note that fertility isn't the only important indicator here. For instance, while adjusted fertility is higher in Germany than in Spain, Germany has had lower fertility for longer, leading to a higher median age and probably a worse situation overall, at least as of right now. Ditto for Estonia, which has both a high median age and suffers from emigration. Still, I think the adjusted TFR as shown in the map above does help you to get a more accurate demographic picture, as long as you keep in mind that there are other variables.
Monday, July 27, 2009
On the aging of Shanghai's population
The city of Shanghai is an exceptional metropolis, one of the largest cities in East Asia and since the 19th century a major commercial, financial, and cultural centre for most of that region. Shanghainese officials helped to guide China's initial opening to the world, and from the 1990s on Shanghai recovered with aplomb from its Communist-inspired isolation from the modern world. Don't believe me? Go to Shanghaiist, for starters. As Tania Branagan noted in The Guardian, Shanghai is also exceptional in China for its fast-aging population.
Shanghai authorities are urging eligible couples to have a second baby amid concerns about a lack of young workers to support its ageing population.
Family planning officials will make home visits and offer counselling and financial advice in a dramatic shift away from the 30-year priority of simply keeping the population down.
China's one-child policy already includes a series of exemptions – including for ethnic minorities and couples who are both only children. But in Shanghai, such families will now be actively encouraged to use what was previously seen as a privilege.
"We just hope more people can have a second child because for Shanghai, as a city which started family planning quite early, the process of ageing is fast," said Zhang Meixin of the Shanghai population and family planning commission. "If eligible couples have two children, it might help to relieve the pressure."
[. . .]
Earlier this year the US-based Centre for Strategic and International Studies warned that China would have more than 438 million over-60s by 2050. Each would have just 1.6 working-age adults to support them, compared with 7.7 in 1975.
The problem is particularly acute in Shanghai. Zhang said its fertility rate was 0.88 in 2008 – far below the national average of around 1.8 – and that which is needed simply to keep the population at the same level.
Fertility rates tend to drop with economic development. China's is still above that of Britain and many European countries.
As UNESCAP documents, the speed and extent of Shanghai's demographic transition is quite notable indeed.
Shanghai authorities had begun to advocate family planning as early as the 1950s. After several decades of efforts, Shanghai currently has the lowest fertility rate in the country. To the end of 1989, the fertility of Shanghai was 10.2 per 1,000, that is lower than 21.8 per 1,000, the fertility for the country as a whole in the same year. In the same period, the general birth rate of Shanghai was only 41.48 per 1,000, lower than the 79.53 per 1,000, the average for the country as a whole in the same period. The total fertility rate of Shanghai is 1.33 children per woman, and it is much lower than the 2.25 mean level for the country as a whole at that time. By the early 1990s, Shanghai's fertility level declined below the replacement level, and negative growth started since 1993. In 2000, CBR was only 5.3 per 1,000, the natural growth rate being -1.9 per 1,000.
This negative growth dates back as early as 1993, as described in this abstract of B. Gu's "Shanghai: a case study of negative population growth", published in 1995 in the Chinese Journal of Population Science.
In 1993 the crude birth rate was 6.50%, the crude mortality rate was 7.27%, and the natural rate of population growth was -0.78%. Shanghai achieved negative population growth (NPG) for the first time in 1993. NPG occurs when the number of births is less than the number of deaths. NPG occurs more frequently in developed rather than developing countries such as China. Shanghai had replacement or below replacement fertility since 1971, when the total fertility rate (TFR) was 1.84 children/woman. China's TFR reached 2.31 children/woman in 1990, whereas Shanghai's TFR of 2.36 children/woman occurred in 1969. In order to reach NPG in Shanghai, fertility was low for 20 years. NPG is reached through low fertility, reduced numbers of women of childbearing age, and increased numbers of elderly. China's age pyramid showed 28% of total population aged under 15 years in 1990 compared to Shanghai's 18%. 9% of China's population comprised people older than 60 years, while Shanghai's elderly amounted to 14% of total population.
Shanghai was already well ahead of the rest of China economically. Shanghai being ahead of the rest of China demographically isn't very surprising. The one-child policy may have simply accelerated the shift to below-replacement fertility, encouraged late marriage and childbearing while encouraging parents to invest heavily in their only child. Birth control has also been widely exercised, as evidenced by Shanghai's very high rate of condom usage. It goes without almost without saying that, as the UNESCAP brief goes on to note, has been quite rapid.
In 2000, the age group of 65 and above totaled 1.93 million, and the percentage of those 65 and above was 11.53%, the highest level in China. The speed of aging of Shanghai not only has exceeded that of Germany, but also Japan, a rapidly aging country in recent years. According to a projection, after a period of sharp increase of the aged population in the 1990s, the course of aging in Shanghai during the twenty-first century would possibly consist of three stages. In stage 1, the first decade of the new century, the speed of aging might become stagnated, while in stage 2, the second and third decade of the new century, Shanghai would experience another period of sharp aging. Nevertheless, in stage 3, approximately 4 or 5 decades after stage 2, the proportion of the aged would gradually remain stable at the level of 20% or so.
That may be optimistic. As observed in 1996, Shanghai's population growth has been driven primarily by migration.
A 1% sample survey was conducted in Shanghai during October 1995. Findings indicate that de jure population was 14.135 million people vs. 13.34 million people in 1990 (an increase of 0.795 million). Part of the increase in population (0.455 million people) during 1990-95 is due to changes in definition of the de jure population. In 1995, de jure means residents of the city for 6 months or more compared with the 1990 requirement of at least 12 months' residency. Natural population growth and net migrants accounted for 0.34 million of the increase in population during 1990-95. The birth rate was 5.75/1000 population in 1995 in Shanghai, or 81,200 births. The death rate was 7.05/1000 population, or 99,600 deaths. The natural rate of growth was a negative 0.13% or a decline of 18,400 population.
Men, Zhou et al in the Journal of Sustainable Development (1.1) noted in their article "Research on Prediction of Shanghai’s Population Development" suggest that without family planning another 7 million people would live in Shanghai, but also note that that while Shanghai's population can be expected to grow strongly thanks to migration, demonstrated also by this news report.
[T]he key factor which will influence the population scale and structure change in Shanghai is ab extra floating population. Ab extra floating population in Shanghai is 1,060,000 in 1988, which has already doubled to 2,510,000 in 1993. The fifth census data shows that, Shanghai’s resident population is 16,400,000 in 2000, among which, the ab extra floating population is 3,870,000, 23.6% around. Currently, floating population who live in Shanghai for more than half a year is about 1/4 of the permanent population.
Peng and Cheng, in their paper "Demographic bonus and the impact of migration: The case of Shanghai" make the good point that Shanghai's population aging and the abundance of labour in the countryside allows Shanghai and migrant-sending areas in rural China chance to benefit from a demographic bonus.
Internal migration can be a win-win strategy for both urban area and rural area and is the bridge to match the conditions of harvesting demographic bonus in both areas. In the rural area, even though exporting & losing young able labour force, is highly benefited due to decrease of unemployment pressure and receipt of remittance that has become a very important economic resource for the rural areas. In other words, the migration makes the use of rural surplus labour in production possible no matter how low of their marginal production is. On the other hand, migration helps urban area solve the problem of young labour shortage, and maintain development strength. We demonstrate that urban economy and urban pension system will take advantage of continued supply of young labour force from the rural area. On the whole, both sending and receiving areas benefit from the migration, as cities prolong the length of demographic window, while rural areas could harvest demographic dividend.
They also note that, "in the long term, neither the extreme higher migration scenario nor the extreme lower migration scenario could keep the window open. Considering the general trend of population growth in China and the unbalanced economic development throughout the country, Shanghai will still be under substantial pressure of immigration in the years to come."
In any case, replacement migration only works so long. A demographic bonus might be realized now, but can it be realized by (say) 2050, when 30 million or so people liive in Shanghai and there just isn't enough rural labour to draw upon?
See here for more information.
Shanghai authorities are urging eligible couples to have a second baby amid concerns about a lack of young workers to support its ageing population.
Family planning officials will make home visits and offer counselling and financial advice in a dramatic shift away from the 30-year priority of simply keeping the population down.
China's one-child policy already includes a series of exemptions – including for ethnic minorities and couples who are both only children. But in Shanghai, such families will now be actively encouraged to use what was previously seen as a privilege.
"We just hope more people can have a second child because for Shanghai, as a city which started family planning quite early, the process of ageing is fast," said Zhang Meixin of the Shanghai population and family planning commission. "If eligible couples have two children, it might help to relieve the pressure."
[. . .]
Earlier this year the US-based Centre for Strategic and International Studies warned that China would have more than 438 million over-60s by 2050. Each would have just 1.6 working-age adults to support them, compared with 7.7 in 1975.
The problem is particularly acute in Shanghai. Zhang said its fertility rate was 0.88 in 2008 – far below the national average of around 1.8 – and that which is needed simply to keep the population at the same level.
Fertility rates tend to drop with economic development. China's is still above that of Britain and many European countries.
As UNESCAP documents, the speed and extent of Shanghai's demographic transition is quite notable indeed.
Shanghai authorities had begun to advocate family planning as early as the 1950s. After several decades of efforts, Shanghai currently has the lowest fertility rate in the country. To the end of 1989, the fertility of Shanghai was 10.2 per 1,000, that is lower than 21.8 per 1,000, the fertility for the country as a whole in the same year. In the same period, the general birth rate of Shanghai was only 41.48 per 1,000, lower than the 79.53 per 1,000, the average for the country as a whole in the same period. The total fertility rate of Shanghai is 1.33 children per woman, and it is much lower than the 2.25 mean level for the country as a whole at that time. By the early 1990s, Shanghai's fertility level declined below the replacement level, and negative growth started since 1993. In 2000, CBR was only 5.3 per 1,000, the natural growth rate being -1.9 per 1,000.
This negative growth dates back as early as 1993, as described in this abstract of B. Gu's "Shanghai: a case study of negative population growth", published in 1995 in the Chinese Journal of Population Science.
In 1993 the crude birth rate was 6.50%, the crude mortality rate was 7.27%, and the natural rate of population growth was -0.78%. Shanghai achieved negative population growth (NPG) for the first time in 1993. NPG occurs when the number of births is less than the number of deaths. NPG occurs more frequently in developed rather than developing countries such as China. Shanghai had replacement or below replacement fertility since 1971, when the total fertility rate (TFR) was 1.84 children/woman. China's TFR reached 2.31 children/woman in 1990, whereas Shanghai's TFR of 2.36 children/woman occurred in 1969. In order to reach NPG in Shanghai, fertility was low for 20 years. NPG is reached through low fertility, reduced numbers of women of childbearing age, and increased numbers of elderly. China's age pyramid showed 28% of total population aged under 15 years in 1990 compared to Shanghai's 18%. 9% of China's population comprised people older than 60 years, while Shanghai's elderly amounted to 14% of total population.
Shanghai was already well ahead of the rest of China economically. Shanghai being ahead of the rest of China demographically isn't very surprising. The one-child policy may have simply accelerated the shift to below-replacement fertility, encouraged late marriage and childbearing while encouraging parents to invest heavily in their only child. Birth control has also been widely exercised, as evidenced by Shanghai's very high rate of condom usage. It goes without almost without saying that, as the UNESCAP brief goes on to note, has been quite rapid.
In 2000, the age group of 65 and above totaled 1.93 million, and the percentage of those 65 and above was 11.53%, the highest level in China. The speed of aging of Shanghai not only has exceeded that of Germany, but also Japan, a rapidly aging country in recent years. According to a projection, after a period of sharp increase of the aged population in the 1990s, the course of aging in Shanghai during the twenty-first century would possibly consist of three stages. In stage 1, the first decade of the new century, the speed of aging might become stagnated, while in stage 2, the second and third decade of the new century, Shanghai would experience another period of sharp aging. Nevertheless, in stage 3, approximately 4 or 5 decades after stage 2, the proportion of the aged would gradually remain stable at the level of 20% or so.
That may be optimistic. As observed in 1996, Shanghai's population growth has been driven primarily by migration.
A 1% sample survey was conducted in Shanghai during October 1995. Findings indicate that de jure population was 14.135 million people vs. 13.34 million people in 1990 (an increase of 0.795 million). Part of the increase in population (0.455 million people) during 1990-95 is due to changes in definition of the de jure population. In 1995, de jure means residents of the city for 6 months or more compared with the 1990 requirement of at least 12 months' residency. Natural population growth and net migrants accounted for 0.34 million of the increase in population during 1990-95. The birth rate was 5.75/1000 population in 1995 in Shanghai, or 81,200 births. The death rate was 7.05/1000 population, or 99,600 deaths. The natural rate of growth was a negative 0.13% or a decline of 18,400 population.
Men, Zhou et al in the Journal of Sustainable Development (1.1) noted in their article "Research on Prediction of Shanghai’s Population Development" suggest that without family planning another 7 million people would live in Shanghai, but also note that that while Shanghai's population can be expected to grow strongly thanks to migration, demonstrated also by this news report.
[T]he key factor which will influence the population scale and structure change in Shanghai is ab extra floating population. Ab extra floating population in Shanghai is 1,060,000 in 1988, which has already doubled to 2,510,000 in 1993. The fifth census data shows that, Shanghai’s resident population is 16,400,000 in 2000, among which, the ab extra floating population is 3,870,000, 23.6% around. Currently, floating population who live in Shanghai for more than half a year is about 1/4 of the permanent population.
Peng and Cheng, in their paper "Demographic bonus and the impact of migration: The case of Shanghai" make the good point that Shanghai's population aging and the abundance of labour in the countryside allows Shanghai and migrant-sending areas in rural China chance to benefit from a demographic bonus.
Internal migration can be a win-win strategy for both urban area and rural area and is the bridge to match the conditions of harvesting demographic bonus in both areas. In the rural area, even though exporting & losing young able labour force, is highly benefited due to decrease of unemployment pressure and receipt of remittance that has become a very important economic resource for the rural areas. In other words, the migration makes the use of rural surplus labour in production possible no matter how low of their marginal production is. On the other hand, migration helps urban area solve the problem of young labour shortage, and maintain development strength. We demonstrate that urban economy and urban pension system will take advantage of continued supply of young labour force from the rural area. On the whole, both sending and receiving areas benefit from the migration, as cities prolong the length of demographic window, while rural areas could harvest demographic dividend.
They also note that, "in the long term, neither the extreme higher migration scenario nor the extreme lower migration scenario could keep the window open. Considering the general trend of population growth in China and the unbalanced economic development throughout the country, Shanghai will still be under substantial pressure of immigration in the years to come."
In any case, replacement migration only works so long. A demographic bonus might be realized now, but can it be realized by (say) 2050, when 30 million or so people liive in Shanghai and there just isn't enough rural labour to draw upon?
See here for more information.
Friday, July 24, 2009
Liberal economics and replacement-level fertility: Are they contradictory?
I'd like to refer our readers to John C. Caldwell and Thomas Schindlmayr' 2003 paper "Explanations of the fertility crisis in modern society: A Search for Commonalities", originally published in Population Studies 27.3, pages 241-263. This paper is a detailed examination of the dynamics behind lowest-low fertility, examining historical trends, government policies, family structures, and so on in a wide variety of countries (Mediterranean Europe, post-Communist Europe, Japan and so on). Their conclusion? The factor common to these different countries and responsible for the shift to lowest-low may well be our globalized economy.
[A] global economy governed by liberal economics creating a high degree of economic individual insecurity may be incompatible with societal replacement. Cohort fertility levels are quite likely to move to ever-lower plateaux, each transition being governed by some severe shock to the system. The mechanisms may be ever fewer couples planning to have more than two children, some deliberately remaining childless or settling for one child, but more failing to achieve a two-child family because of intervening temptations for education, occupational advance, travel, companionate pleasures, or expensive housing.
There are too many different groups of countries with very low fertility and different specific explanations for their situations for us not to conclude that there must be a common deeper explanation for all their conditions. Over-arching conditions common to all developed countries determine fertility decline, but local and sometimes transient idiosyncrasies shape the timing and tempo (see Watkins 1990). That explanation at its broadest must be the creation of a world economic system where children are of no immediate economic value to their parents. Related integral factors include, among other things, rising educational attainment for women and labour force participation. Yet, differences at the national level in legislation, policies, and the response of the population to these institutional settings, as well as family structures, partner relations, childcare expenses, and attitudes towards children determine the shape of the decline. Certainly at present the situation is aggravated by many peoples feeling the cold blasts of liberal economics to a greater extent than previously, but the acceptance of liberal economic policies is largely the outcome of the decision to award economic growth a higher priority than demographic growth. It may be a system to which the world will adjust, much as it is claimed the Anglo-Saxon world has.
The broadest explanation would echo the 1937 view of Kingsley Davis (1997) that ultimately the reproduction of the species is not easily compatible with advanced industrial society. This is a consequence of that society’s rewards in the form of a career for women outside the home and the almost measureless temptations of the modern consumer society. The example of the richest countries, and the impact of modern advertising in the context of a global economy and a near-global political system, makes people in poorer countries yearn for the same possessions, especially motor cars, often giving the desire for such possessions priority over children. There is an extraordinary simultaneity in the contemporary world. Children do not easily fit in with a great deal of travel, and the entertainment they provide can be replaced by the electronic media and other pleasures. Yet couples will probably continue to regard two children as ‘ideal’, partly because they provide a unique and different kind of fulfillment, and usually admire even parents who make little impression on their peers. There is an awareness too that children will ultimately build up a network of relatives, the only adequate network many people may possess; and that, even in a wellinsured welfare state, children may be needed in old age for company as well as physical and financial assistance. These advantages may prove to be sufficient to raise fertility to replacement level or higher in nationalistic states facing declining numbers and with a mandate from their electorate to spend hugely to overcome the difficulties faced by women or couples who want all the modern world can provide but who, if that provision can be maintained, are willing to have children as well. This time may not come for decades but it is likely that prototypes will begin to develop.
In their different ways, France and the United States might be these prototypes. Then again even in these countries there's dissent, as evidenced by French writer Corinne Maier's No Kids: 40 Good Reasons Not to Have Children. She received substantial international attention for her thesis.
Q: Your two children, Laure and Cyrille, 14 and 12, are old enough to read your book and to be affected by it. What was their reaction?
A: When it was released I explained to them what it is about but they haven't read it because they aren't very interested in what I do. They prefer to read Harry Potter and (books by) Stephen King.
Q: What about their friends, and their friends' parents?
A: My name is different. They have the name of their father so nobody knows who I am.
[. . .]
Q: How would you characterize the reception to the book, aside from its huge success on the stands? Has the reaction been hostile? Welcoming?
A: Some people laughed because it was written to be funny. Other people thought it was shocking. Some people wrote to me to tell me that I was a monster. Some journalists wrote that my book was in extremely bad taste and a bad read. Many people disliked it and said it was inappropriate. They thought that a mother of two should not be allowed to write such things about children because, of course, "children are our future" and "they are so important," and "nothing is more beautiful than a smile on a child's face."
And in Canada, a place with a TFR of ~1.5 and cohort fertility of ~1.7, the front cover of the latest issue of English Canada's newsmagazine MacLean's is promoting the article "The Case Against Having Kids" (They can hurt your careeer, your marriage, your social life, your bank book. Why bother?).
Stay tuned.
[A] global economy governed by liberal economics creating a high degree of economic individual insecurity may be incompatible with societal replacement. Cohort fertility levels are quite likely to move to ever-lower plateaux, each transition being governed by some severe shock to the system. The mechanisms may be ever fewer couples planning to have more than two children, some deliberately remaining childless or settling for one child, but more failing to achieve a two-child family because of intervening temptations for education, occupational advance, travel, companionate pleasures, or expensive housing.
There are too many different groups of countries with very low fertility and different specific explanations for their situations for us not to conclude that there must be a common deeper explanation for all their conditions. Over-arching conditions common to all developed countries determine fertility decline, but local and sometimes transient idiosyncrasies shape the timing and tempo (see Watkins 1990). That explanation at its broadest must be the creation of a world economic system where children are of no immediate economic value to their parents. Related integral factors include, among other things, rising educational attainment for women and labour force participation. Yet, differences at the national level in legislation, policies, and the response of the population to these institutional settings, as well as family structures, partner relations, childcare expenses, and attitudes towards children determine the shape of the decline. Certainly at present the situation is aggravated by many peoples feeling the cold blasts of liberal economics to a greater extent than previously, but the acceptance of liberal economic policies is largely the outcome of the decision to award economic growth a higher priority than demographic growth. It may be a system to which the world will adjust, much as it is claimed the Anglo-Saxon world has.
The broadest explanation would echo the 1937 view of Kingsley Davis (1997) that ultimately the reproduction of the species is not easily compatible with advanced industrial society. This is a consequence of that society’s rewards in the form of a career for women outside the home and the almost measureless temptations of the modern consumer society. The example of the richest countries, and the impact of modern advertising in the context of a global economy and a near-global political system, makes people in poorer countries yearn for the same possessions, especially motor cars, often giving the desire for such possessions priority over children. There is an extraordinary simultaneity in the contemporary world. Children do not easily fit in with a great deal of travel, and the entertainment they provide can be replaced by the electronic media and other pleasures. Yet couples will probably continue to regard two children as ‘ideal’, partly because they provide a unique and different kind of fulfillment, and usually admire even parents who make little impression on their peers. There is an awareness too that children will ultimately build up a network of relatives, the only adequate network many people may possess; and that, even in a wellinsured welfare state, children may be needed in old age for company as well as physical and financial assistance. These advantages may prove to be sufficient to raise fertility to replacement level or higher in nationalistic states facing declining numbers and with a mandate from their electorate to spend hugely to overcome the difficulties faced by women or couples who want all the modern world can provide but who, if that provision can be maintained, are willing to have children as well. This time may not come for decades but it is likely that prototypes will begin to develop.
In their different ways, France and the United States might be these prototypes. Then again even in these countries there's dissent, as evidenced by French writer Corinne Maier's No Kids: 40 Good Reasons Not to Have Children. She received substantial international attention for her thesis.
Q: Your two children, Laure and Cyrille, 14 and 12, are old enough to read your book and to be affected by it. What was their reaction?
A: When it was released I explained to them what it is about but they haven't read it because they aren't very interested in what I do. They prefer to read Harry Potter and (books by) Stephen King.
Q: What about their friends, and their friends' parents?
A: My name is different. They have the name of their father so nobody knows who I am.
[. . .]
Q: How would you characterize the reception to the book, aside from its huge success on the stands? Has the reaction been hostile? Welcoming?
A: Some people laughed because it was written to be funny. Other people thought it was shocking. Some people wrote to me to tell me that I was a monster. Some journalists wrote that my book was in extremely bad taste and a bad read. Many people disliked it and said it was inappropriate. They thought that a mother of two should not be allowed to write such things about children because, of course, "children are our future" and "they are so important," and "nothing is more beautiful than a smile on a child's face."
And in Canada, a place with a TFR of ~1.5 and cohort fertility of ~1.7, the front cover of the latest issue of English Canada's newsmagazine MacLean's is promoting the article "The Case Against Having Kids" (They can hurt your careeer, your marriage, your social life, your bank book. Why bother?).
Stay tuned.
Demographic Link Dump - Asia Edition
In Japan, at least some companies are moving towards facilitating parenthood. It is not clear how extensive the phenomenon is or how effective it will be, but it seems like a sensible step. Interestingly, the programs seem exclusively focused on women. Presumably, Japanese men will continue to be expected to work late, leaving the burden of childrearing to the women. I'm not sure how appealing this is to Japanese ladies.
The local government in Shanghai is growing concerned about the city's rapid aging and is encouraging those who are eligible under China's one-child policy to have that second baby. I personally doubt the one-child policy will last for another decade but I'm not convinced that lifting it would change that much either.
In South Korea, producers of baby formula are struggling because of the low birth rate and so are the nation's maternity clinics: "The declining number of newborns is leading to a declining number of clinics. The country had 1,907 maternity clinics in 2005... ...and 1,669 last year. The clinics that remain in business seem to be surviving on side jobs rather than their traditional business of delivering babies. The message boards at imsanboo.com, an online community for pregnant women, are flowing comments from frustrated would-be women forced to move from clinic to clinic. Many mid-sized maternity hospitals are found to be blatantly refusing to deliver babies, instead focusing on easier and more profitable services such as skin care and cosmetic surgeries. .... ... The Health Insurance Service believes that only 30 percent of the country's maternity hospitals have capable personnel or equipment to deliver babies."
The local government in Shanghai is growing concerned about the city's rapid aging and is encouraging those who are eligible under China's one-child policy to have that second baby. I personally doubt the one-child policy will last for another decade but I'm not convinced that lifting it would change that much either.
In South Korea, producers of baby formula are struggling because of the low birth rate and so are the nation's maternity clinics: "The declining number of newborns is leading to a declining number of clinics. The country had 1,907 maternity clinics in 2005... ...and 1,669 last year. The clinics that remain in business seem to be surviving on side jobs rather than their traditional business of delivering babies. The message boards at imsanboo.com, an online community for pregnant women, are flowing comments from frustrated would-be women forced to move from clinic to clinic. Many mid-sized maternity hospitals are found to be blatantly refusing to deliver babies, instead focusing on easier and more profitable services such as skin care and cosmetic surgeries. .... ... The Health Insurance Service believes that only 30 percent of the country's maternity hospitals have capable personnel or equipment to deliver babies."
In Malaysia, the fertility rate continues to decline and it's now at 2.6, declining at about 0.1 a year. Strangely, the Malaysian Health minister attributes this to increasing medical problems with infertility among Malaysian women.
The Census Bureau on Global Aging
Earlier this week, the US Census Bureau released a new report on global aging which nicely complements the post Claus put up earlier this week on the same subject. To regular followers of this blog, the contents should come as no surprise, but it does provide a good summary of the global situation.
The global percentage of elderly people (65 and over) is expected to rise from 7 to 14 percent by 2040. 14 percent is not a problematic number in itself, the problem is rather the uneven distribution with a disproportionate number in developed countries. This will obviously continue. The median age in Japan is projected to reach 54 in 2040 with several European countries close to 50. Even the relatively youthful US is expected to approach 40.
As I said, none of this is unexpected and most people and governments are aware of this, even if they're doing precious little about it. For me, the big story of the next thirty years will be the rapid aging of Asia. It's not just Japan anymore. South Korea is aging faster than any nation in history. By 2040 China will also start suffering the very real effects of a shrinking and aging population. Given the enormous size of the Chinese population, there is just no way for immigration to compensate.
One last point: The report of the US census bureau is focused on the purely fiscal effects of aging. These are well know: increased expenditure on pensions and health care, shrinking work forces, increased dependency ratios where an ever shrinking of people have to provide for ever more people. However, this report like many others, seems to overlook the structural effects on the economy which is the basis of much of the work Edward and Claus has done here. I think the arguments are persuasive that aging leads to weak domestic consumption and increasing export dependency -but it's not feasible for everyone to be export dependent. By 2040, essentially all of the developed world will be aged, including most of Asia. By 2070, the same will probably apply to South Asia and the Middle East. What then?
The global percentage of elderly people (65 and over) is expected to rise from 7 to 14 percent by 2040. 14 percent is not a problematic number in itself, the problem is rather the uneven distribution with a disproportionate number in developed countries. This will obviously continue. The median age in Japan is projected to reach 54 in 2040 with several European countries close to 50. Even the relatively youthful US is expected to approach 40.
As I said, none of this is unexpected and most people and governments are aware of this, even if they're doing precious little about it. For me, the big story of the next thirty years will be the rapid aging of Asia. It's not just Japan anymore. South Korea is aging faster than any nation in history. By 2040 China will also start suffering the very real effects of a shrinking and aging population. Given the enormous size of the Chinese population, there is just no way for immigration to compensate.
One last point: The report of the US census bureau is focused on the purely fiscal effects of aging. These are well know: increased expenditure on pensions and health care, shrinking work forces, increased dependency ratios where an ever shrinking of people have to provide for ever more people. However, this report like many others, seems to overlook the structural effects on the economy which is the basis of much of the work Edward and Claus has done here. I think the arguments are persuasive that aging leads to weak domestic consumption and increasing export dependency -but it's not feasible for everyone to be export dependent. By 2040, essentially all of the developed world will be aged, including most of Asia. By 2070, the same will probably apply to South Asia and the Middle East. What then?
Tuesday, July 21, 2009
A link on the history of Algerian emigration
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Has the world reached replacement rate fertility?
At first glance, the question might seem odd, given that the global fertility rate is currently estimated by the UN to be somewhere around 2.5, well above 2.1, which is usually cited as the replacement rate. However, 2.1 is a number that is often bandied about somewhat lazily, even by people who should know better. It is important to remember that the replacement rate is not a constant and the 2.1 number is only really relevant for developed countries where the actual replacement rate is usually in the 2.06-2.08 range.
The replacement rate depends on several factors: age-specific fertility rates, female mortality rates and sex ratio at birth. Indeed, a useful approximation for the replacement rate is simply the inverse of female chance of survival till the mean age of motherhood times the proportion of female babies at birth. To give an example, in Norway the mother's average age at birth is 30.3, 99.2% of women survive till that age and 49% of births are girls. Thus, the replacement rate would be 1/(0.992*0.49)=2.06.
This is an approximation, the actual calculation of replacement rate is fairly complicated and involves using things like life tables, age-specific fertility rates etc. and requires a level of data accuracy that isn't available in most countries. The British Office for National Statistics has a useful explanation here for the technically inclined. The approximation method above is much simpler and about as accurate.
Now, why is this important? Well, because replacement rates varies widely. Norway in the example above is at the lower bound of the variation but at the upper bound you have countries like Sierra Leone where it is around 3.2. Espenshade et al. published a paper in 2003 (behind firewall) where they tried to calculate replacement rates in different countries. Espenshade also co-authored a more recent open-access article on this subject on populationaction.org. Key quote: "Four fifths of the world's 6.5 billion people live in countries in which replacement rate fertility is above 2.1 and 215 million people live in countries with replacement rate fertility higher than three children."
When countries like India target a fertility rate of 2.1, it is important to remember that this is actually well below replacement rate there. Indeed, for the world as a whole, replacement rate is slightly above 2.3 children. That means we're not quite there yet, but almost. The point is that when we'll get there depends both on the evolution of the fertility rate and of the replacement rate. The latter will again depend on a number of things: mortality rates, the gender imbalance at birth in Asia and also the increasing proportion of births that occur in countries with high replacement rates.
Update: A commentator asked where one could find replacement rates by country. I have been able to find an open-access source here.
The replacement rate depends on several factors: age-specific fertility rates, female mortality rates and sex ratio at birth. Indeed, a useful approximation for the replacement rate is simply the inverse of female chance of survival till the mean age of motherhood times the proportion of female babies at birth. To give an example, in Norway the mother's average age at birth is 30.3, 99.2% of women survive till that age and 49% of births are girls. Thus, the replacement rate would be 1/(0.992*0.49)=2.06.
This is an approximation, the actual calculation of replacement rate is fairly complicated and involves using things like life tables, age-specific fertility rates etc. and requires a level of data accuracy that isn't available in most countries. The British Office for National Statistics has a useful explanation here for the technically inclined. The approximation method above is much simpler and about as accurate.
Now, why is this important? Well, because replacement rates varies widely. Norway in the example above is at the lower bound of the variation but at the upper bound you have countries like Sierra Leone where it is around 3.2. Espenshade et al. published a paper in 2003 (behind firewall) where they tried to calculate replacement rates in different countries. Espenshade also co-authored a more recent open-access article on this subject on populationaction.org. Key quote: "Four fifths of the world's 6.5 billion people live in countries in which replacement rate fertility is above 2.1 and 215 million people live in countries with replacement rate fertility higher than three children."
When countries like India target a fertility rate of 2.1, it is important to remember that this is actually well below replacement rate there. Indeed, for the world as a whole, replacement rate is slightly above 2.3 children. That means we're not quite there yet, but almost. The point is that when we'll get there depends both on the evolution of the fertility rate and of the replacement rate. The latter will again depend on a number of things: mortality rates, the gender imbalance at birth in Asia and also the increasing proportion of births that occur in countries with high replacement rates.
Update: A commentator asked where one could find replacement rates by country. I have been able to find an open-access source here.
Some notes on Brazilian migration trends
A recent article by the Irish Times's Ruadhán Mac Cormaic, "American Dream, Brazilian Reality" takes a detailed look at many of the trends behind Brazilian emigration, starting with the city of Governador Valadores in the prosperous central Brazilian state of Minas Gerais.
Governador Valadares doesn’t look like a city in the throes of a great social upheaval. Set amid an endless sweep of coffee plantations and tropical forest in landlocked Minas Gerais state, and reached by way of a turbo-prop plane that swings low into the valley on its twice-daily approach, the city has the detached, languid air of a remote country town.
Brasilia is 1,000km to the west, Sao Paulo almost as far to the south. Were it not for Ibituruna, a soaring volcanic peak that lures intrepid paragliders, or the gem mines that mark the surrounding countryside, you might think, Valadares would scarcely attract a glance from the outside world.
And yet the city has made quite a name for itself by turning its own attention outwards. Ask about emigration in Brazil and the conversation invariably turns to Valadares, a town which, more than any other in the country, is synonymous with the high emigration of the past two decades.
In that time, it is estimated, more than 80,000 people – about a third of its current population – have left here for New England and Florida. Today, nearly every family has someone living in the US. So important has been the flow of American currency back to the city – it amounted to half the city budget until recently, by some estimates – that some had taken to calling it Governador Vala dolares.
The city’s link to the US stretches back to the 1940s, when American companies first came to the area seeking mica, a heat-resistant mineral, to help the war effort. That contact led the first migrants to be seduced into moving north and set in train a flow that would define the city for the rest of the century. Today, beyond the veneer of the Brazilian everytown, signs of the link abound. There seems to be an English-language school or a travel agency at every turn, while on the outskirts of the city the large houses modelled on Hollywood’s cliché of American suburbia are hard to miss.
Mac Cormaic goes on to explain that the city's economy has come to depend heavily on the remittances provided by Valadarese migrants to the United States, most of these migrants present illegally, the remittances fueling consumption and business investments. With the onset of the global recession, Governador Valadores' economy is starting to come unglued.
Brazil, like the other BRIC countries, has become a country of mass emigration. As Amaral and Fusco wrote in 2005 "Shaping Brazil: The Role of International Migration", economic turmoil has made a Brazil with the long history of immigration to Brazil that made the country one of the most multicultural countries in the world one providing an increasingly large number of emigrants.
Beginning in the second half of the 1980s, Brazilians from various socioeconomic levels started to emigrate to other countries in search of economic opportunities. High inflation and low economic growth in the 1980s, known as the "lost decade", followed by the government's unsuccessful liberal economic policies in the 1990s, meant that even educated Brazilians could make more money doing low-skilled work abroad.
By the 1990s, over 1.8 million Brazilians were living outside the country (see Table 1), mainly in the United States, Paraguay, and Japan, but also in Italy, Portugal, the United Kingdom, France, Canada, Australia, Switzerland, Germany, Belgium, the Netherlands, and Israel. There were no specific policies implemented by the government to encourage or discourage this emigration process.
In 2000, Brazilian consulates and embassies registered eight hundred thousand Brazilian in the United States, concentrated in New York, Miami and Boston, more than four hundred thousand Brazilians in Paraguay, mostly in the east of the country, and a quarter-million in Japan, mostly Japanese-Brazilians recruited to work in the industrial sector, with another four hundred thousand living in other countries. Eduardo L.G. Rios-Neto, in "Managing Migration: The Brazilian Case", suggests that half of Brazilian emigrants come from the prosperous southeast.
Against this, nearly seven hundred thousand immigrants lived in Brazil, particularly the southeast, as "56.3 percent of Brazil's total foreign population came from Europe, 21 percent from South and Central America, and 17.8 percent from Asia." Migrants from elsewhere in South America are also starting to become more prominent, with skilled migrants coming from Argentina and Chile and unskilled migrants arriving from Andean countries. Many of these immigrants are illegal; President Luiz Inacio Lula da Silva recently signed into existence a law that regularized the status of many of these.
The future of migration with Brazil is open. Inasmuch as emigration is concentrated particularly among the relatively well-off and well-educated classes of the southeast, Brazil could face a problem of brain drain. The country is not one of the top emigration countries, per capita or even absolutely, but in the context of BRIC countries, Brazil is relatively most affected by emigration--the number of emigrants from Brazil is absolutely much smaller than India or China but relatively larger, while between Brazil and its near-peer Russia, slight net emigration in Brazil and net immigration in Russia is driven by the relatively unattractiveness of Brazil as a destination for migrants from its neighbours. Unlike Russia, Brazil's population is expected to grow: The Population Reference Bureau estimates that the Brazilian population will reached 260 million by 2050, versus a projection of less than 110 million people in Russia. Moreover, if Brazil continues its steady growth, it may yet become a migration magnet acting on its neighbours, just as the United States acts on its less-developed neighbours.
Governador Valadares doesn’t look like a city in the throes of a great social upheaval. Set amid an endless sweep of coffee plantations and tropical forest in landlocked Minas Gerais state, and reached by way of a turbo-prop plane that swings low into the valley on its twice-daily approach, the city has the detached, languid air of a remote country town.
Brasilia is 1,000km to the west, Sao Paulo almost as far to the south. Were it not for Ibituruna, a soaring volcanic peak that lures intrepid paragliders, or the gem mines that mark the surrounding countryside, you might think, Valadares would scarcely attract a glance from the outside world.
And yet the city has made quite a name for itself by turning its own attention outwards. Ask about emigration in Brazil and the conversation invariably turns to Valadares, a town which, more than any other in the country, is synonymous with the high emigration of the past two decades.
In that time, it is estimated, more than 80,000 people – about a third of its current population – have left here for New England and Florida. Today, nearly every family has someone living in the US. So important has been the flow of American currency back to the city – it amounted to half the city budget until recently, by some estimates – that some had taken to calling it Governador Vala dolares.
The city’s link to the US stretches back to the 1940s, when American companies first came to the area seeking mica, a heat-resistant mineral, to help the war effort. That contact led the first migrants to be seduced into moving north and set in train a flow that would define the city for the rest of the century. Today, beyond the veneer of the Brazilian everytown, signs of the link abound. There seems to be an English-language school or a travel agency at every turn, while on the outskirts of the city the large houses modelled on Hollywood’s cliché of American suburbia are hard to miss.
Mac Cormaic goes on to explain that the city's economy has come to depend heavily on the remittances provided by Valadarese migrants to the United States, most of these migrants present illegally, the remittances fueling consumption and business investments. With the onset of the global recession, Governador Valadores' economy is starting to come unglued.
Brazil, like the other BRIC countries, has become a country of mass emigration. As Amaral and Fusco wrote in 2005 "Shaping Brazil: The Role of International Migration", economic turmoil has made a Brazil with the long history of immigration to Brazil that made the country one of the most multicultural countries in the world one providing an increasingly large number of emigrants.
Beginning in the second half of the 1980s, Brazilians from various socioeconomic levels started to emigrate to other countries in search of economic opportunities. High inflation and low economic growth in the 1980s, known as the "lost decade", followed by the government's unsuccessful liberal economic policies in the 1990s, meant that even educated Brazilians could make more money doing low-skilled work abroad.
By the 1990s, over 1.8 million Brazilians were living outside the country (see Table 1), mainly in the United States, Paraguay, and Japan, but also in Italy, Portugal, the United Kingdom, France, Canada, Australia, Switzerland, Germany, Belgium, the Netherlands, and Israel. There were no specific policies implemented by the government to encourage or discourage this emigration process.
In 2000, Brazilian consulates and embassies registered eight hundred thousand Brazilian in the United States, concentrated in New York, Miami and Boston, more than four hundred thousand Brazilians in Paraguay, mostly in the east of the country, and a quarter-million in Japan, mostly Japanese-Brazilians recruited to work in the industrial sector, with another four hundred thousand living in other countries. Eduardo L.G. Rios-Neto, in "Managing Migration: The Brazilian Case", suggests that half of Brazilian emigrants come from the prosperous southeast.
Against this, nearly seven hundred thousand immigrants lived in Brazil, particularly the southeast, as "56.3 percent of Brazil's total foreign population came from Europe, 21 percent from South and Central America, and 17.8 percent from Asia." Migrants from elsewhere in South America are also starting to become more prominent, with skilled migrants coming from Argentina and Chile and unskilled migrants arriving from Andean countries. Many of these immigrants are illegal; President Luiz Inacio Lula da Silva recently signed into existence a law that regularized the status of many of these.
The future of migration with Brazil is open. Inasmuch as emigration is concentrated particularly among the relatively well-off and well-educated classes of the southeast, Brazil could face a problem of brain drain. The country is not one of the top emigration countries, per capita or even absolutely, but in the context of BRIC countries, Brazil is relatively most affected by emigration--the number of emigrants from Brazil is absolutely much smaller than India or China but relatively larger, while between Brazil and its near-peer Russia, slight net emigration in Brazil and net immigration in Russia is driven by the relatively unattractiveness of Brazil as a destination for migrants from its neighbours. Unlike Russia, Brazil's population is expected to grow: The Population Reference Bureau estimates that the Brazilian population will reached 260 million by 2050, versus a projection of less than 110 million people in Russia. Moreover, if Brazil continues its steady growth, it may yet become a migration magnet acting on its neighbours, just as the United States acts on its less-developed neighbours.
Monday, July 20, 2009
What's So Funny About Japan?
by Claus Vistesen and Edward Hugh
The following article appeared in the June 2009 issue of Japan Inc.
Japan’s economy just does not seem to be able to catch a break at the moment. GDP contracted at an annual pace of over 15.2 percent in the first three months of this year, while industrial output fell by over 34.5 percent following a contraction in exports which was nearer to the 40 percent mark. As a result the International Monetary Fund (IMF) now predicts the Japanese economy will contract by about 6 percent over the year as a whole (which compares with their current forecast that the U.S. Activity will decline by a “mere” 2.8 percent), and just to add insult to injury, Japan seems once again to be headed back into that same old dreaded deflation which it has just spent the best part of a decade and a half trying to escape from.
Of course, behind these horrendous numbers lies the ongoing global economic and financial crisis which, after hitting the headlines in the middle of 2007 with the “turmoil” surrounding the subprime mortgages problem in the United States, has steadily spread its grasp across one economy after another around the globe. But while this crisis is certainly a global one, its impact is most definitely local, and not all countries have been on the receiving end in similar measure. The striking thing about what is happening now in Japan is how suddenly, after what appeared to be such a marked and sustained recovery, the economy has folded in on itself. What was once again being seen as a star performer has now become one of the worst case scenarios. So the question naturally arises: Why is this happening?
What is so funny about Japan’s economy?
So why is Japan special? Well obviously for a whole bundle of reasons, but the one we would like to pick up here, in this brief review of the current state of play, would be Japan’s demographics, defined as they are by many years of extremely low fertility, and what could at best be described as extremely tepid efforts to stimulate inward migration. As far as we can see, it is Japan’s demography which, in many ways, condemns it to the kind of painful vulnerability to external shocks to which we are all currently bearing witness.
Demography is a problem for Japan, since the aging population is clearly leading to lacklustre domestic demand, and this is what lies behind the country’s evident increasing dependence of exports. Back in 2006, Morgan Stanley’s chief Japan economist Robert Alan Feldman got to the heart of the problem when he asked one very simple question: What is so funny about consumption in Japan? The conundrum, according to Feldman, is one of why we have seen such high capital expenditure (capex) and such low consumption during the recent very pronounced expansion. Now even the most basic economic intuitions suggest that such a relationship is far from stable. If government spending holds constant, firms should adjust their investment decisions to the level of demand for their products, and this, in a modern economy, is normally driven by the rate of growth in demand coming from end consumers. The problem is that in Japan’s case, the key end consumers are largely “elsewhere,” that is, they are outside Japan. Feldman’s answer to the conundrum this represents is really quite neat. Starting with the obvious fact that Japan is aging, Feldman points out as the total population is set to shrink much more slowly than the labor force, each worker will need to be supported by more capital to keep productivity, and thus living standards, stable.
This intuition, derived as it is from the fundamental tenets of standard economic growth theory, is however only as good for as far as it goes. The key issue to grasp is that since Japan is an open economy, the internal deficit accumulated by having a high capex, low consumption economy can only be made good by exporting “excess” products or capital. This in turn means that domestic investment decisions respond to foreign demand and rates of return.
Feldman’s solution to Japan’s problem is attractive in that, as well as being intuitive economics, it also finds strong circumstantial backing in the data itself. Movements in Japanese private consumption have lagged well behind headline GDP growth, while the country has been running a sizeable external surplus, as expressed in its current account balance hitting an all time high of 4.8 percent of GDP in 2007, boosted by both a trade surplus and a surplus on income flowing back from Japanese savings invested abroad. What export dependence means in the context of an economy with a rapidly aging population is that investment becomes tightly linked with exports, thus breaking one of the key economic transmission mechanisms, since when this link breaks down, there is no second leg to offer support and growth goes rapidly into reverse gear. This situation is abundantly clear in the current economic crisis since a collapse in demand elsewhere has caused both industrial production and exports to plunge leaving Japan with no line of defense in terms of independent economic momentum.
Fiscal stimulus and quantitative easing, will it be enough?
While it is certainly true that the Japanese economy is currently struggling, it is not entirely true that there is no line of defense. Japan still has both monetary policy and fiscal policy tools at its disposal. The problem is that having spent a decade and a half attempting to fight the twin problems of deficient internal demand and ongoing deflation, the force of these tools has been steadily ground down. Interest rate adjustments, after many years when Bank of Japan (BoJ) rates have been held near zero levels, have little additional push to offer, while less conventional tools (like simply printing even more money via quantitative easing) or strong fiscal stimulus face clear limits in a country where gross debt to GDP is forecast by the OECD to hit 193 percent in 2009.
So what can Japan do? Well besides simply grinning and bearing it, the tragedy is that there is not a lot that can be done in the short term. Evidently the Japanese government should give what support it can through highly targeted spending programs. The Bank of Japan, meanwhile, should be moving ahead with an aggressive policy of quantitative easing to provide as much relief as possible to Japan’s struggling households and corporates. But the only real way forward here is to try to slow the rate of population aging, and that means a change in national discourse and priorities, giving more support to those Japanese women who want to have children and radically changing the mindset about the extent to which Japan needs to promote an active immigration policy.
The following article appeared in the June 2009 issue of Japan Inc.
Japan’s economy just does not seem to be able to catch a break at the moment. GDP contracted at an annual pace of over 15.2 percent in the first three months of this year, while industrial output fell by over 34.5 percent following a contraction in exports which was nearer to the 40 percent mark. As a result the International Monetary Fund (IMF) now predicts the Japanese economy will contract by about 6 percent over the year as a whole (which compares with their current forecast that the U.S. Activity will decline by a “mere” 2.8 percent), and just to add insult to injury, Japan seems once again to be headed back into that same old dreaded deflation which it has just spent the best part of a decade and a half trying to escape from.
Of course, behind these horrendous numbers lies the ongoing global economic and financial crisis which, after hitting the headlines in the middle of 2007 with the “turmoil” surrounding the subprime mortgages problem in the United States, has steadily spread its grasp across one economy after another around the globe. But while this crisis is certainly a global one, its impact is most definitely local, and not all countries have been on the receiving end in similar measure. The striking thing about what is happening now in Japan is how suddenly, after what appeared to be such a marked and sustained recovery, the economy has folded in on itself. What was once again being seen as a star performer has now become one of the worst case scenarios. So the question naturally arises: Why is this happening?
What is so funny about Japan’s economy?
So why is Japan special? Well obviously for a whole bundle of reasons, but the one we would like to pick up here, in this brief review of the current state of play, would be Japan’s demographics, defined as they are by many years of extremely low fertility, and what could at best be described as extremely tepid efforts to stimulate inward migration. As far as we can see, it is Japan’s demography which, in many ways, condemns it to the kind of painful vulnerability to external shocks to which we are all currently bearing witness.
Demography is a problem for Japan, since the aging population is clearly leading to lacklustre domestic demand, and this is what lies behind the country’s evident increasing dependence of exports. Back in 2006, Morgan Stanley’s chief Japan economist Robert Alan Feldman got to the heart of the problem when he asked one very simple question: What is so funny about consumption in Japan? The conundrum, according to Feldman, is one of why we have seen such high capital expenditure (capex) and such low consumption during the recent very pronounced expansion. Now even the most basic economic intuitions suggest that such a relationship is far from stable. If government spending holds constant, firms should adjust their investment decisions to the level of demand for their products, and this, in a modern economy, is normally driven by the rate of growth in demand coming from end consumers. The problem is that in Japan’s case, the key end consumers are largely “elsewhere,” that is, they are outside Japan. Feldman’s answer to the conundrum this represents is really quite neat. Starting with the obvious fact that Japan is aging, Feldman points out as the total population is set to shrink much more slowly than the labor force, each worker will need to be supported by more capital to keep productivity, and thus living standards, stable.
This intuition, derived as it is from the fundamental tenets of standard economic growth theory, is however only as good for as far as it goes. The key issue to grasp is that since Japan is an open economy, the internal deficit accumulated by having a high capex, low consumption economy can only be made good by exporting “excess” products or capital. This in turn means that domestic investment decisions respond to foreign demand and rates of return.
Feldman’s solution to Japan’s problem is attractive in that, as well as being intuitive economics, it also finds strong circumstantial backing in the data itself. Movements in Japanese private consumption have lagged well behind headline GDP growth, while the country has been running a sizeable external surplus, as expressed in its current account balance hitting an all time high of 4.8 percent of GDP in 2007, boosted by both a trade surplus and a surplus on income flowing back from Japanese savings invested abroad. What export dependence means in the context of an economy with a rapidly aging population is that investment becomes tightly linked with exports, thus breaking one of the key economic transmission mechanisms, since when this link breaks down, there is no second leg to offer support and growth goes rapidly into reverse gear. This situation is abundantly clear in the current economic crisis since a collapse in demand elsewhere has caused both industrial production and exports to plunge leaving Japan with no line of defense in terms of independent economic momentum.
Fiscal stimulus and quantitative easing, will it be enough?
While it is certainly true that the Japanese economy is currently struggling, it is not entirely true that there is no line of defense. Japan still has both monetary policy and fiscal policy tools at its disposal. The problem is that having spent a decade and a half attempting to fight the twin problems of deficient internal demand and ongoing deflation, the force of these tools has been steadily ground down. Interest rate adjustments, after many years when Bank of Japan (BoJ) rates have been held near zero levels, have little additional push to offer, while less conventional tools (like simply printing even more money via quantitative easing) or strong fiscal stimulus face clear limits in a country where gross debt to GDP is forecast by the OECD to hit 193 percent in 2009.
So what can Japan do? Well besides simply grinning and bearing it, the tragedy is that there is not a lot that can be done in the short term. Evidently the Japanese government should give what support it can through highly targeted spending programs. The Bank of Japan, meanwhile, should be moving ahead with an aggressive policy of quantitative easing to provide as much relief as possible to Japan’s struggling households and corporates. But the only real way forward here is to try to slow the rate of population aging, and that means a change in national discourse and priorities, giving more support to those Japanese women who want to have children and radically changing the mindset about the extent to which Japan needs to promote an active immigration policy.
Sunday, July 19, 2009
Why Japan Isn't Rising
Due to the importance of the issues raised, and the similarities of the viewpoints expressed with those of this blog, we are happy to take the exceptional step of publishing this article from Daniel Gross. The article originally appeared in Slate on 18 July 2009, and a modified version also appeared in last week's issue of Newsweek.
Why Japan Isn't Rising - It's mellowing as its population ages.
by Daniel Gross
To this gaijin, Japan looks prosperous, clean, highly functioning. At Takashimaya, the high-end department store atop the central train station in Nagoya, shoppers line up in orderly queues before the 10 a.m. opening. But Japan seems to be in the midst of an existential crisis—in the first quarter it shrank at an abysmal 15.2 percent annual rate. In 10 days traveling through the country, I couldn't find anyone who thought the malaise would end soon.
Japan's rise literally from rubble into an industrial powerhouse is one of the great economic stories of the 20th century. But a slow response to the bursting real-estate and stock bubbles of the 1980s consigned the country to a decade of economic slumber from which it has yet to fully awake. The first great wave of globalization was kind to Japan. But the second wave, dominated by China, which is set to surpass Japan this year as the world's second-largest economy, poses a serious challenge. The unemployment rate has spiked to an unthinkable 5.2 percent, and Japan seems to have reconciled itself to decline. Twenty years after the publication of The Japan That Can Say No, a manifesto of self-assertion co-written by Sony Chairman Akio Morita, we seem to have "The Japan That Can Grow Slow." And part of it is because Japan, like the baby boomers in America, is mellowing as it gets older.
Japan still retains its lead in engineering. A showroom at Panasonic's headquarters displayed a heated, multifunction toilet seat that conserves energy. (Wouldn't leaving the seat cold conserve even more?) The sleek Shinkansen bullet trains roll up to their appointed spots on time. TKX, an 87-year-old Osaka-based company that makes abrasives, has adapted its expertise to cutting silicon ingots into wafers for solar panels.
Why Japan Isn't Rising - It's mellowing as its population ages.
by Daniel Gross
To this gaijin, Japan looks prosperous, clean, highly functioning. At Takashimaya, the high-end department store atop the central train station in Nagoya, shoppers line up in orderly queues before the 10 a.m. opening. But Japan seems to be in the midst of an existential crisis—in the first quarter it shrank at an abysmal 15.2 percent annual rate. In 10 days traveling through the country, I couldn't find anyone who thought the malaise would end soon.
Japan's rise literally from rubble into an industrial powerhouse is one of the great economic stories of the 20th century. But a slow response to the bursting real-estate and stock bubbles of the 1980s consigned the country to a decade of economic slumber from which it has yet to fully awake. The first great wave of globalization was kind to Japan. But the second wave, dominated by China, which is set to surpass Japan this year as the world's second-largest economy, poses a serious challenge. The unemployment rate has spiked to an unthinkable 5.2 percent, and Japan seems to have reconciled itself to decline. Twenty years after the publication of The Japan That Can Say No, a manifesto of self-assertion co-written by Sony Chairman Akio Morita, we seem to have "The Japan That Can Grow Slow." And part of it is because Japan, like the baby boomers in America, is mellowing as it gets older.
Japan still retains its lead in engineering. A showroom at Panasonic's headquarters displayed a heated, multifunction toilet seat that conserves energy. (Wouldn't leaving the seat cold conserve even more?) The sleek Shinkansen bullet trains roll up to their appointed spots on time. TKX, an 87-year-old Osaka-based company that makes abrasives, has adapted its expertise to cutting silicon ingots into wafers for solar panels.
But social engineering is proving more challenging. Japan's population peaked in 2004 at about 127.8 million and is projected to fall to 89.9 million by 2055. The ratio of working-age to elderly Japanese fell from 8-to-1 in 1975 to 3.3-to-1 in 2005 and may shrivel to 1.3-to-1 in 2055. "In 2055, people will come to work when they have time off from long-term care," said Kiyoaki Fujiwara, director of economic policy at the Japan Business Federation.
Such a decline is cataclysmic for an indebted country that values infrastructure and personal service. (Who is going to maintain the trains, pay for social benefits, slice sushi at the Tsukiji fish market?) The obvious answers—encourage immigration and a higher birthrate—have proved difficult, even impossible, for this conservative society. In the United States, foreign-born workers make up 15 percent of the work force; in Japan, it's 1 percent. And, official protestations to the contrary, they're not particularly welcome. One columnist I met compared the standard Japanese attitude toward immigrants to that of French right-winger Jean-Marie Le Pen. In the 1990s, descendants of Japanese who had emigrated to South America early in the 20th century returned to replace retiring factory workers. Now that unemployment is on the rise, Japan is offering to pay the airfare for those who wish to return home.
Japan doesn't particularly want to import new citizens, but it doesn't seem to want to manufacture them, either. It's become harder to support a family on a single income, and young people are living at home for longer. And Japan isn't particularly friendly to working mothers—pre-K day care is not widely available, and the phrase work-life balance doesn't seem to have a Japanese translation. (The directory of the Japanese Business Federation, a showcase of old guys in suits, makes the Republican Senate caucus look like a Benetton ad.) The upshot: a chronically low birthrate. Too often, demographic change was described to me as a zero-sum game—rather than being seen as potential job creators, women and immigrants are often seen as taking jobs from men.
Chalk it up to age or to culture, but Japan strikes me as strangely passive about the huge changes it is facing. I heard plenty of bromides about the need for new policies toward both immigration and work-life issues but no real policies. "The ongoing issues of the lower birthrate and the aging society have been going with such speed that the national design of how to respond to that has not caught up yet," said Yuriko Koike, a TV reporter turned politician (Japan's first female defense minister) and one of the most prominent women in public life.
As befits a nation riven by geological faults, the focus seems to be on planning to use technology to manage the impact of unstoppable events rather than averting them. In Toyota City, where robots do 90 percent of the welding work on Priuses at the Tsutsumi plant, I asked a city official how demographic changes would affect the delivery of health care. He responded, only partially in jest, "Maybe the robots will take care of us."
Global Population Ageing - What Do We Know?
Update 1: I have added a comment below by Warren Sanderson who is one of the co-authors of the paper discussed below. It was first posted over on my personal blog where this entry has been up for a couple of days.
Update 2: Just to remind our readers (if they had not discovered it themselves) that there is a very interesting discussion unfolding in the post by Aslak about the correlation between higher overall fertility and non-marital births.
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In this enty I am going to plug a recent paper on global ageing [1] by Wolfgang Lutz Warren C. Sanderson, and Sergei Scherbov published in the brand new journal, Journal of Population Ageing, edited by the team of demographers, Sarah Harper and George Leeson, at the Oxford institute of Ageing (Oxford University). Also, this would naturally be a nice occasion to ever so slowly reveal what I am arguing in the context of my own research; research which is naturally heavily affected by the likes of Lutz, Malmberg, Lee, McDonald and other of our time's great (econ)-demographers. [Graphs are made by the author and not taken from Lutz et al.]
With respect to Lutz et al they set out to grapple with one of the most difficult issues in the context of demographics and ageing in the form of our ability to forecast the future trends of ageing in the context of the global economy and different regions. The main conclusions indicate a rapid and, in some cases, accelerating process of population ageing in a global context in the next decades as well as a the very likely outcome that global population growth will cease to exist as a lingering phenomenon in the century which follows. Here is their abstract;
Population ageing is, in the first instance, a demographic phenomenon; although its consequences go far beyond demography. But the future trends of ageing are not yet known and many of the consequences of ageing will depend on the future speed and extent of ageing. Here we summarize what is already known and what is not yet known about future ageing trends in different parts of the world. We do this through the means of new probabilistic population forecasts. The section ‘New Regional and Global Probabilistic Population Forecasts’ presents the results of those forecasts. They confirm the earlier finding (Lutz et al., Nature, 412(6846), 543–545, 2001a) that it is highly likely that the world’s population growth will come to the end during this century. The following four sections present results for proportions of populations 60+, old age dependency ratios, proportions 80+ and average ages. In the section ‘New Measures of Ageing’, we analyse a new measure of ageing that takes life expectancy changes into account.
The first question which immediately springs to mind (or at least it did to me) is first and foremost what kind of techniques the authors are using in their endeavors to actually make forecasts on a variable as complex as ageing and so far into the future. Well, this is also where water gets muddied since it is important to realize, a priori, the amount of uncertainty which are attached to the kind of exercise Lutz et al. embark on. As most of you will know ageing is driven by the joint process of declining fertility and increasing life expectancy (and to some extent migration) and once we use this break down to operationalize ageing it gets dreadfully difficult to forecast although there are tentative conclusions which can be drawn based on existing evidence. In this way, it is important to dwell at the main conclusion, namely that the world as a whole is set to age rapidly before heading off into more specific forecasts.
The formal technique used by Lutz et al. is probabilistic forecasting which is basically a technique of collecting random draws from existing data on fertility, mortality and migration in order to produce a series of potential distributions and paths which can ageing can take as we move forward. Lutz et al. center on five simulations. The first in the context of total population size, the second on the proportion of people aged 60+, the third focuses on dependency ratios, the fourth turns the attention to the proportion of people aged 80+ and the final simulation centers on average age.
In relation to the first simulation which focuses on population growth it appears certain that the global population will continue to grow up until 2030-2050 depending on the path you look at. Beyond that point the simulations become extremely insecure ranging from a continuation of population growth to a decline in population growth which will restore the global population level at its 2000 level in the year 2100. Needless to say that such exercises are largely pointless from the point of view of inference about e.g. economic effects. However, what seems to survive as a main conclusion is that it is very likely that the tendency of population growth will come to an end some time during the next century, something which is significant in its own right in a world where the discourse on global warming, in my opinion, risks to engender policy advice to emerging economies which are essentially ill informed.
With respect to the paper in general I take away the following points in random order.
- The potential importance of migration. In this regard, it is worthwhile to have a look at the simulated path for population growth (and thus in some sense the change in age structure) for Eastern Europe and Sub-Saharan Africa. As many of you will have guessed the former shows a steady decline (rapid ageing) from 2010 and onwards whereas the latter is set to increase (in all probability) towards the year 2050 (and beyond). Although uncertainty remains it is undoubtedly true that in a world of complete equalization of factor returns and with no barriers (of any kind!) to labor flows a lot of the detrimental impacts from ageing could be mitigated. Having said this though, I still want to emphasise the importance of managing the transition in an emerging market context since all evidence points towards a much more rapid move towards below replacement levels once economic development sets in. In short, population managment policies need to look at both sides of the coin.
- A rapid increase in the proportion of 60+. Perhaps this is the most striking aspect of the coming process of ageing and whether we concur with the actual forecasts, there is no doubt that the change in age structure measured as an increasingly large share of, in this case, people aged 60+ is going to be extraordinary. According to Lutz et al. by 2040 the probability of the entire of Europe (CEE+Russia), Japan/Oceania as well as China having more than a third of its population aged 60+ is over 80%. This raises some extremely important important questions which researchers are only now starting to focus on. What happens to the labour supply of people in the 60s-70s? How does the life cycle of the young adjust to the skewed age distribution and what about that of the "old"? How should life expectancy be calibrated into the issue of raising retirement age for this growing age group? What happens to the productivity profile of society? And of course, my favorite; how will these changes be transmitted through capital flows both in a time series perspective (i.e. for the individual economy) as well as of course in a cross sectional perspective where the fact that all surpluses and deficits must add up act as a decisive binding constraint on the ability of some economies to smooth consumption and investment optimally.
- The analysis on old age dependency (60+/20-59) ratio mirrors the points above to a large extent, but leafing through some of the tentative conclusions e.g. in the context of Japan and China I am pretty amazed, if not scared, by the projections. Especially, in the context of the former some of the projected paths would quite literally mean that the market economy (with associated welfare structures) will cease to exist. The interesting thing about the latter (China) is of course that for all the hopes about China ascending to take over the baton of the US as the sole global leader, most people are missing the fact that the country, in all likelihood, is going to catch up (and surpass) large parts of the OECD in terms of ageing as soon as the 2020-2025 mark.
- Turning the attention to the forecasted share of people aged 80+ my own opinion is that this is pretty useless. I mean, I salute the effort but as the authors themselves point out; once we incorporate the long time horizons (up to 2100!) and most importantly the extreme uncertainty surrounding future mortality evolutions for this age group (both in terms of life expectancy at birth as well as on a cumulative basis for the people alive today) the uncertainty takes on huge proportions. What we know naturally is that the number will increase substantially, but also that it is likely to do so following a concave function of time as one would assume the extra gain in life expectancy gets smaller. [2].
Now, as Lutz et al never tire of pointing out throughout their excursion into the world of forecasting population ageing, this is all very uncertain and for two reasons primarily. Firstly, there is the inherent uncertainty associated with forecasting and essentially mapping changes in fertility, mortality, and migration. Secondly, there is the effect from moving the goal posts, or in this case; the reference points in relation to ageing. The simple point here is that it is not certain that old will mean the same thing tomorrow as it does today. This is especially the case of course if mortality continues to decline.
If this concludes the look on the paper by Lutz et al. I think it is worthwhile to produce something of an apology. Consequently, I have on several occasions pointed towards the futility (and in some cases stupidity) of narrating demographic changes in the context of what might and might not happen once the calendar shows 2050. Yet, here I even venture something about the state of affairs in the year 2100. An explanation is in order I think.
First of all, I maintain my view that the most important issue with respect to population ageing is the period one or two decades forward in time. Even if we might be able to plausibly say something interesting about ageing beyond this point the economic effects from ageing are correspondingly almost impossible to map. One good example here is the supposed asset meltdown scenario which is supposed to hit us in 2040-2050 as the weight of older age cohort's dissaving pushes up real interest interests and floods the market with assets (i.e. disinvestment) for which there is not a significant amount of takers. Not only do researchers only scantly understand what is actually meant by dissaving, there is also reason to believe that although optimal from an individual's life cycle perspective dissaving is not optimal from the point of view of an ageing society writ large [3].
With this general point in mind it is also worth recognizing a fundamental pre-requisite for focusing on ageing, namely the fact that the demographic transition is not over. It is ongoing and given the fact that the coming age of ageing which was initiated somewhere in the late 1960s (in the context of the OECD) it means that fertility will not stabilize at replacement levels. Despite the obvious reality of this point and the subsequent need to adjust models, views and analyses accordingly many still assume for example that global fertility, by some form of magic, is imbued with a drift parameter that will take it to replacement levels in the year 2100. Let me state as clearly that I can that such assumptions are completely useless. Interestingly and as a short digression, demographers have been focusing on this for quite some time and although the people at the UN, arguably, are getting better I would still recommend anyone interested in this to go back to the seminal volume edited by Jones et al and look up the chapter by Demeny where he ties the UN Population projections, of the time, up in knots. He essentially rams home the point that replacement fertility constitutes, in his own words, an implausible endpoint of the demographic transition; a point John C. Caldwell made already in the beginning of the 1980s. Whoever made the point first, this is extraordinarily important to take aboard.
In fact, I would take all this a step further.
In most modern accounts of the demographic transitions the traditional process is amended by an additional phase, or transition if you will, called the second demographic transition Van de Kaa (2002)[4] (or phase of ageing Lee (2003)). Now, I tend to take a more drastic approach. Quite simply I think that the transition need to be revamped all together and that a focus on ageing and age structure should be adopted at the offset. In this sense I think that Malmberg and Sommestad (2000) is a very important starting point since this the most comprehensive contribution which maps the whole transition in the context of ageing (specifically using Sweden). Working from this I believe that we can narrate the demographic transition in a way which makes it much more likely for us to use it to make inferences on economic processes which is ultimately my goal even if the study of demographics is a fascinating area in itself.
With respect to the question implicitly posed by Lutz et al. and thus how much we actually know about the global and regional process of ageing the initial answer has to be that we know quite a bit. Most importantly, you have to remember that ageing is not a new phenomenon and as I would argue a lingering aspect of the entire transition. The key is what happens next to mortality, fertility and migration and here uncertainty is vast although I should stress yet again that idea of convergence towards homoestasis in which these parameters are constant is not a desirable way to look at demographic processes. If we want to model this and if we want to make solid economic inference we need to take into account a myriad of feedback loops as well as the path dependency of the transition. With this end point it is perhaps apt to recall Socrates who reminded us of the fact that knowing that one knows nothing or very little is actually knowing quite a bit.
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For more on population ageing, the Economist had an interesting briefing on the issue a couple of weeks ago which touches on some of the same points as above and provides some nice examples and cases. Finally, I also think that I should plus Georg Magnus' book the Age of Ageing which is really also a nice introduction for the intermediate laymen. In terms of academic papers that offers a general introduction to the issue of modern population dynamics and ageing Lee (2003) is a must, but also this paper by David S. Reher is very good (I discuss the paper here). Hopefully, I will have my own contribution to offer soon which sets the demographic transition in the context of economics and how it should understood in order to best make the connection to the study of economic phenomena.
List of References
Harper, Sarah and Howse, Kenneth (2009) - An Upper Limit to Human Longevity?, Journal of Population Ageing, Vol 1, issue 2.
Jones, Gavin W; Douglas, Robert M; Caldwell, John C; and D'Souza, Rennie M (1997) - The Continuing Demographic Transition, Clarendon Press Oxford; chapter 5, Replacement Level Fertility: The Implausible End Point of the Demographic Transition, Paul Demeny.
Magnus, George (2008) - The Age of Ageing, Wiley
Malmberg, Bo and Lena, Sommestad (2000) – Four Phases of the Demographic Transition, ”Implications for Economic and Social Development in Sweden 1820-2000” Arbetsrapport/Institut för Framtidsstudier; 2000:6. The paper was presented at the SSHA meeting in Pittsburg. October 2000.
Lee, Ronald (2003) – The Demographic Transition – Three Centuries of Fundamental Change, Journal of Economic Perspectives vol.17 issue 4, pp. 167-190 fall 2003
Lutz, Wolfgang; Sanderson, Warren C; and Scherbov Sergei (2008) - Global and Regional Population Ageing - How Certain Are we of its Dimensions, Journal of Population Ageing vol 1, issue 1. '
Reher, David S (2007) - Towards long-term population decline: a discussion of relevant issues, European Journal of Population
Van de Kaa, Dirk J. (2002) – The Idea of a Second Demographic Transition in Industrialised Countries, National Institute of Population and Social Security, Tokyo, Japan 29 January 2002
Notes
[1] - The paper is walled for non-subscribers, and I can't of course upload a version here, but mail me and we can discuss the paper "further" if you like ...
[2] - Although it should be noted here that in a recent literature survey on human longevity by Sarah Harper and Kenneth Howse evidence is provided, from Japan, that mortality shows no sign of "compression" at older ages which indicate a linear rather than a concave function.
[3] - I will have much more about this in my next posts where I respond to this.
[4] - The idea of the SDT dates back to the 1980s and earlier works by Van de Kaa as well as Boongaarts.
Thursday, July 16, 2009
Institutional Adaptations to Migrants and Transnationalism
I'd like to point our readers towards David Fitzgerald's recent Migration Information article "Uncovering the Emigration Policies of the Catholic Church in Mexico". As the article's title suggests, Fitzgerald reviews how the Catholic Church in Mexico tried first to prevent emigration, then to help emigrants preserve their culture in ways consistent with Catholic mores.
The first mass wave of emigration from Mexico took place during the 1910s and 1920s as Mexicans fled political and economic turmoil at home for work in US agriculture and railroads. By 1929, an estimated 738,500 people of Mexican birth lived in the United States. Many of them migrated seasonally.
Within Mexico, most elites opposed the mass migration of its people, the country's largest asset, to the United States.
The strongest sentiment against emigration during this period came from the Catholic Church, an influential voice in a country where more than 98 percent of the population identified as Catholic even as the Church continued to lose its long and bloody struggles with the government. The Church feared that migration caused the breakup of families, religious conversions, and the introduction of dangerous foreign ideas.
However, the Church's various attempts to prevent migration northward largely failed. By the 1960s, its migration policy shifted to preparing migrants for the journey, establishing closer ties with the Church in the United States, and becoming a voice for migrants' rights while encouraging both their US integration and homeland ties.
With 88 percent of Mexicans older than age 4 being Catholic in 2000 according to INEGI, Mexico's official statistical agency, the Church continues to play an important role in the migration experience even as the number of evangelical Christians grows.
What strikes me most about the Mexican experience is how closely it resembles the Franco-American experience, as I blogged last July
[M]ass language shift from French to English is not unique in the history of North American Francophones. Starting in the late 19th century, relative economic underdevelopment propelled a tremendous migration of Francophones out from their traditional settlement areas along the St. Lawrence River and the Gulf of St. Lawrence to adjacent parts of the continent. Large and thriving communities of Franco-Americans (concentrated in New England, particularly in that region's industrial cities) and Franco-Ontarians (concentrated in northern and eastern areas adjacent to Québec) formed at this time, encouraging some to believe in the idea of a greater Québec encompassing those communities. That vision failed, as the Franco-American community was whittled away through immigration restrictions and acculturation to the Anglophone culture surrounding them. Franco-Ontarians, who with few exceptions like in Anglophone-majority communities relatively isolated from Québec, may be about to follow. And no, the Francophones who are tourists in Maine or long-term residents in Florida don't make up the same sorts of communities.
As I noted in a June 2008 post at my blog, all the blandishments of nationalists and Franco-Americans in the Catholic Church urging French Canadians to stay in Canada, if not on their own land, failed miserably. In one case recorded at the above blog link, the arrival of so many relatively prosperous Franco-Americans helped encourage migration! Towards the end of the immigration in the 1900-1920 period, just as the Mexican Catholic Church tried to prepare and help preserve their culture, so did French Canadians and Franco-Americans inside the American Catholic Church tried to create a self-sustaining conservative culture in the Little Canada urban enclaves. They failed, in the end. Jack Kerouac did write in English, after all.
What impresses me most about the past experience of French Canadians and the current experience of Mexicans is the way in which originally national institutions became transnational, representing the nation at home and abroad. There's signs that this sort of institutional adaptation to transnationalism is present in other instances, as in Morocco's refusal to let emigrants abandon their citizenship on the grounds that they remain part of the nation. Can our readers think of other circumstances?
The first mass wave of emigration from Mexico took place during the 1910s and 1920s as Mexicans fled political and economic turmoil at home for work in US agriculture and railroads. By 1929, an estimated 738,500 people of Mexican birth lived in the United States. Many of them migrated seasonally.
Within Mexico, most elites opposed the mass migration of its people, the country's largest asset, to the United States.
The strongest sentiment against emigration during this period came from the Catholic Church, an influential voice in a country where more than 98 percent of the population identified as Catholic even as the Church continued to lose its long and bloody struggles with the government. The Church feared that migration caused the breakup of families, religious conversions, and the introduction of dangerous foreign ideas.
However, the Church's various attempts to prevent migration northward largely failed. By the 1960s, its migration policy shifted to preparing migrants for the journey, establishing closer ties with the Church in the United States, and becoming a voice for migrants' rights while encouraging both their US integration and homeland ties.
With 88 percent of Mexicans older than age 4 being Catholic in 2000 according to INEGI, Mexico's official statistical agency, the Church continues to play an important role in the migration experience even as the number of evangelical Christians grows.
What strikes me most about the Mexican experience is how closely it resembles the Franco-American experience, as I blogged last July
[M]ass language shift from French to English is not unique in the history of North American Francophones. Starting in the late 19th century, relative economic underdevelopment propelled a tremendous migration of Francophones out from their traditional settlement areas along the St. Lawrence River and the Gulf of St. Lawrence to adjacent parts of the continent. Large and thriving communities of Franco-Americans (concentrated in New England, particularly in that region's industrial cities) and Franco-Ontarians (concentrated in northern and eastern areas adjacent to Québec) formed at this time, encouraging some to believe in the idea of a greater Québec encompassing those communities. That vision failed, as the Franco-American community was whittled away through immigration restrictions and acculturation to the Anglophone culture surrounding them. Franco-Ontarians, who with few exceptions like in Anglophone-majority communities relatively isolated from Québec, may be about to follow. And no, the Francophones who are tourists in Maine or long-term residents in Florida don't make up the same sorts of communities.
As I noted in a June 2008 post at my blog, all the blandishments of nationalists and Franco-Americans in the Catholic Church urging French Canadians to stay in Canada, if not on their own land, failed miserably. In one case recorded at the above blog link, the arrival of so many relatively prosperous Franco-Americans helped encourage migration! Towards the end of the immigration in the 1900-1920 period, just as the Mexican Catholic Church tried to prepare and help preserve their culture, so did French Canadians and Franco-Americans inside the American Catholic Church tried to create a self-sustaining conservative culture in the Little Canada urban enclaves. They failed, in the end. Jack Kerouac did write in English, after all.
What impresses me most about the past experience of French Canadians and the current experience of Mexicans is the way in which originally national institutions became transnational, representing the nation at home and abroad. There's signs that this sort of institutional adaptation to transnationalism is present in other instances, as in Morocco's refusal to let emigrants abandon their citizenship on the grounds that they remain part of the nation. Can our readers think of other circumstances?
The decadent shall inherit the Earth
The concern about excessive aging in developed countries is obviously not limited to this blog but also extends to the governments in question. Among other things, this has lead the OECD to establish the OECD Family database, which is a nice collection of data about things like fertility, public spending on family benefits and child care, parental leave, female employment etc. in the developed world.
One of the more interesting things is the correlation between fertility and the share of births outside wedlock.
The correlation is even clearer when you exclude the formerly communist countries as well as countries like Mexico and Turkey:
Now, obviously this flies in the face of the socially conservative meme that the dissolution of family values leads to the dissolution of society and people becoming too "selfish" to have children. Correlation is not causation, but I do feel that the share of births outside marriage is a useful proxy for how traditional the family structure is. The problem with the traditional family from a demographic perspective is that it often forces the mother to choose between career and children. In very traditional societies, where women do not have the opportunity to pursue careers, this does lead to high fertility rates. But once you give the women the opportunity to pursue careers, the traditional family structure makes them choose, and a lot of them will choose their careers and maybe one child. Countries with more flexible family structures that give women the opportunity to combine their careers with motherhood get a double bonus: both higher female employment rates, since those who would prioritize motherhood in a more traditional society get the chance to work, and higher fertility rates, since those who prioritize their careers have more children. Indeed, an often-noted trend in the demographic literature is the emergence of a strong correlation between female labor force participation rates and fertility in developed countries.
Note that this graph is from 2001. If I had the time to make a more recent one, it would show an even stronger relationship.
One of the more interesting things is the correlation between fertility and the share of births outside wedlock.
The correlation is even clearer when you exclude the formerly communist countries as well as countries like Mexico and Turkey:
Now, obviously this flies in the face of the socially conservative meme that the dissolution of family values leads to the dissolution of society and people becoming too "selfish" to have children. Correlation is not causation, but I do feel that the share of births outside marriage is a useful proxy for how traditional the family structure is. The problem with the traditional family from a demographic perspective is that it often forces the mother to choose between career and children. In very traditional societies, where women do not have the opportunity to pursue careers, this does lead to high fertility rates. But once you give the women the opportunity to pursue careers, the traditional family structure makes them choose, and a lot of them will choose their careers and maybe one child. Countries with more flexible family structures that give women the opportunity to combine their careers with motherhood get a double bonus: both higher female employment rates, since those who would prioritize motherhood in a more traditional society get the chance to work, and higher fertility rates, since those who prioritize their careers have more children. Indeed, an often-noted trend in the demographic literature is the emergence of a strong correlation between female labor force participation rates and fertility in developed countries.
Note that this graph is from 2001. If I had the time to make a more recent one, it would show an even stronger relationship.
Tuesday, July 14, 2009
Demographic Link Dump
-In a truly fascinating article from last fall, Mara Hvistendahl looks at the causes and consequences of China's gender imbalance. The gender imbalance in Asia in general and China in particular will be one of the most important social phenomena in this century and this article does a great job of exploring it. Highly recommended.
-Ulster's Dooomed is a blog devoted to what, according to the blogger, is the inevitable nationalist and Catholic majority in Northern Ireland. Although he obviously writes from a certain point of view, if you dig in the archives there's plenty of interesting political demography there, including district-by-district demographic analysis.
-For those who don't know about it, the UN's World Population Prospects Database is not a perfect resource for global demographic data, but it's the best we've got. It is more reliable than the CIA World Factbook and even when you have doubts about the accuracy they make it easy to figure out what their source is. With regards to their projections, they do have a track record of overestimating population growth and underestimating fertility decline, so caveat emptor.
-The South Koreans are getting very worried about their demographic prospects. Although the South Korean population is still comparatively young, they're aging quicker than anyone. Key quote: "The percentage of people in South Korea aged 65 and over will reach 11 percent next year, lower than the 15.9 percent average for advanced nations, but wil soar to 38.2 percent by 2050, surpassing the 26.2 percent average for advanced nations by a huge margin" Although they're aware of the problem and done some modest attempts to adress it, their pro-natalist policies have so far been spectacularly unsuccessful.
-Ulster's Dooomed is a blog devoted to what, according to the blogger, is the inevitable nationalist and Catholic majority in Northern Ireland. Although he obviously writes from a certain point of view, if you dig in the archives there's plenty of interesting political demography there, including district-by-district demographic analysis.
-For those who don't know about it, the UN's World Population Prospects Database is not a perfect resource for global demographic data, but it's the best we've got. It is more reliable than the CIA World Factbook and even when you have doubts about the accuracy they make it easy to figure out what their source is. With regards to their projections, they do have a track record of overestimating population growth and underestimating fertility decline, so caveat emptor.
-The South Koreans are getting very worried about their demographic prospects. Although the South Korean population is still comparatively young, they're aging quicker than anyone. Key quote: "The percentage of people in South Korea aged 65 and over will reach 11 percent next year, lower than the 15.9 percent average for advanced nations, but wil soar to 38.2 percent by 2050, surpassing the 26.2 percent average for advanced nations by a huge margin" Although they're aware of the problem and done some modest attempts to adress it, their pro-natalist policies have so far been spectacularly unsuccessful.
Thursday, July 09, 2009
Greenland: Dubai on the Arctic or slow decline?
Earlier this year, Greenland celebrated an expansion of home-rule, which was widely seen as an important step towards possible independence. For Greenlandic nationalists, the main goal has long been to end centuries of Danish rule, even though as colonial masters go, the Danes have been about as benevolent as they come. Greenlanders have a strong sense of nationhood and has under Danish rule been able to preserve its culture, notably its language since Denmark has mostly had a policy of leaving the Inuits alone except for the Christianization in the 18th century. But how viable is Greenland really as an independent nation?
The first obstacle that comes up is economic. Greenland today is dependent upon subsidies from the Danish state to the tune of 30% of Greenlandic GDP and more than half of government revenues. The usual solution to this is the hope that there is vast reserves of oil, natural gas and minerals, which will become accessible if Greenland continues to warm up. The idea is that global warming will make it possible to exploit off-shore resources despite the harsh climate. There is a lot of uncertainty and good reasons for scepticism about this, the climate is too harsh and the extent of the natural gas and available is uncertain. but even if the petroleum dream comes true, the demography does not work in Greenland’s favour.
One problem is, simply put, that Greenland’s population is too small with only 56 000 people for an area which is more than two million square kilometres, three times the size of Texas or half the size of the European Union. About 50,000 are Greenlandic while the rest are mainly Danes. The lack of population alone means that Greenland would be dependent on other countries for education. Having to send people abroad for university education is an obstacle, but still, there are successful statelets with small populations, like Iceland (pop. 300,000) and the Cayman Islands (pop. 50,000) in addition to relatively poor island states.
However, unlike the more successful states but just like many indigenous peoples elsewhere, Greenland suffers from severe social problems. The native Greenlandic population, mostly Inuits, although often with mixed Inuit-Nordic heritage, has widespread problems with alcoholism. A recent survey (in Danish) indicated that 38% of Greenlandic men and 12% of the women showed signs of “damaging abuse of alcohol or alcohol dependency”. Greenland has the highest suicide rate in the world with an annual rate of more than 1 in 1000. (And no, it is not the latitude and lack of sun. The Scandinavian countries have, contrary to popular myth, suicide rates that are about average for the developed word, i.e. 0.1 in 1000) and the education level is very low. In 1996 (Danish) only 2.8% had a university education and people with higher education are disproportionally not native but recruited from elsewhere, mostly Denmark. In addition there are problems with violence, including relatively high rates of domestic abuse.
All of this makes it difficult for Greenland both to retain its own and attract new immigrants. Although fertility rates are relatively high and stable in the 2.2-2.4 range, Greenland has had a net emigration of 300-500 people annually in recent years, which is obviously significant in a country where 800-900 people are born annually. In fact, Greenland’s population is now definitely declining despite high birth rates
Where does this leave Greenland? Well, it is absolutely dependent on Denmark, not just for subsidies but also for qualified labor. Compared to its neighbour Iceland, it not only has a smaller population but also significantly lower human capital. Even if natural gas exploitation became viable, Greenland would be completely reliant on foreign labor to exploit it since the Greenlandic population has neither the numbers nor the qualifications required. In the unlikely scenario that the most optimistic predictions become true, the Greenlandic people, like the Emirates, risk becoming a minority in their own country. Moreover, there are serious questions about whether the Greenlandic authorities have the institutional resilience and strength required to manage a sudden influx of oil wealth in a responsible manner. Certainly, in the past there has been accusations of widespread nepotism, if not outright corruption, which does not bode well for the future.
The sad fact is that Greenland does not have the demographic and social strength to become a viable independent country. Thus, even in the best-case scenario it is likely to remain dependent on Denmark or other countries if not for money, then at least for qualified, educated people. In perhaps the most likely scenario, there will continue to be a dual dependency. Meanwhile, Greenlandic youth will continue to emigrate and Greenland will continue to suffer a demographic decline.
Wednesday, July 08, 2009
More on Cuban population futures
Cuba's population aging, which I blogged about back in August 2006, is starting to gain more press attention.
The article goes on to note that, with strained pension and other welfare systems, the standard of living for Cuban seniors may be quite low. Moreover, as the article notes, Cuba's aging isn't helped by emigration; the abstract "Cuban International Migration and Low Fertility Conditions ..." makes the point that Cuba's natural increase is diminished substantially by emigration. This will alter Cuba's standing in the Caribbean: A G. Edward Ebanks notes in his paper, continued high population growth in the Dominican Republic can expected to make that country the largest Hispanophone country in the Caribbean by the mid-21st century, while--he does not say, but this can be inferred--the Dominican Republic's lack of controls on internal migration allows for more fluid population distributions more suitable for an effective capitalist economy.
The UNFPA paper Social policies, family arrangements and population ageing in Cuba, by Rolando García Quiñones, goes into substantial detail. The findings are relatively predictable: Urban and developed areas are relatively older than rural and underdeveloped areas, the size of the average family has declined even as younger people find it necessary to stay in the family home on account of housing issues, and so on. The raising of the retirement age is something that receives extended treatment.
Until 2008, retirement age was 55 years for women and 60 for men. A new Law on Social and Security Assistance, approved by the end of last year by Parliament, came into effect on January 2009. Among other aspects, the new law modifies retirement age, increasing it by 5 years. But this increase will be gradual.
From 2009 onwards, retirement age will be raised six months each year, up to the year 2018, when it would be established at 60 years for women and 65 for men. Its application during the next ten years defers the retirement of more than 285 thousand people, with a saving of 4.5 billion pesos to the Social Security coffers. In the mean time it has been decided to increase the retirement benefits and to establish other benefits.
Of course, things can and will be complicated by migration. I've blogged about the division between Cubas A and B, a relatively developed west and a relatively underdeveloped east that traditionally produces migrants. Let's not forget the United States, home to a Cuban-American community with members numbering more than a tenth of the population of Cuba itself and concentrated in a south Florida that's the nearest point of American land to Cuba itself, providing beside numerous human links to sustain chain migration.
These migrations, on top of the general population aging, will certainly have a major impact on Cuba's long-term prospects. Replacement migration is a possibility, I suppose, but where from? Cuba's high human development doesn't correspond to the sort of high economic development that attracts migrants. It may well be that even with a best-case post-Castro transition, Cuba's economic prospects may be hamstrung by an excess of seniors and an insufficiency of workers. What the consequences of this would be for Cuban stability I leave to others to imagine.
This country reached a tipping point in 2006. It wasn’t any one event in particular, but according to Cuba’s Office of National Statistics, the island’s population of 11.2 million stopped growing that year, and dipped slightly. And it has been falling ever since.
Cuba’s population is projected to decrease by 100,000 by 2025, and the arithmetic behind that decline is a simple matter of subtraction: More and more Cubans are leaving the island, and Cuban mothers are having fewer children. The country’s fertility rate of 1.4 children per woman ranks as the lowest in Latin America.
The statistics highlight a risky demographic experiment that has been developing here for years.
While Cuba’s socialist health care system takes good care of the elderly and has prolonged life expectancy rates, the island’s lousy economy--squeezed by U.S. trade sanctions and its own inefficiencies--is driving young people to emigrate, while limiting family size.
As a result, senior citizens will be one of the fast-growing sectors of Cuba’s population in the coming decades. Life expectancy in Cuba is now 75 years for men and 79 for women, roughly on par with the United States, where those figures are 75 and 80, respectively, according to United Nations statistics. By 2025, according a recent article on the topic in Cuba’s communist newspaper Granma, 26 percent of Cubans will be 60 or older--the highest percentage of seniors in Latin America.
The article goes on to note that, with strained pension and other welfare systems, the standard of living for Cuban seniors may be quite low. Moreover, as the article notes, Cuba's aging isn't helped by emigration; the abstract "Cuban International Migration and Low Fertility Conditions ..." makes the point that Cuba's natural increase is diminished substantially by emigration. This will alter Cuba's standing in the Caribbean: A G. Edward Ebanks notes in his paper, continued high population growth in the Dominican Republic can expected to make that country the largest Hispanophone country in the Caribbean by the mid-21st century, while--he does not say, but this can be inferred--the Dominican Republic's lack of controls on internal migration allows for more fluid population distributions more suitable for an effective capitalist economy.
The UNFPA paper Social policies, family arrangements and population ageing in Cuba, by Rolando García Quiñones, goes into substantial detail. The findings are relatively predictable: Urban and developed areas are relatively older than rural and underdeveloped areas, the size of the average family has declined even as younger people find it necessary to stay in the family home on account of housing issues, and so on. The raising of the retirement age is something that receives extended treatment.
Until 2008, retirement age was 55 years for women and 60 for men. A new Law on Social and Security Assistance, approved by the end of last year by Parliament, came into effect on January 2009. Among other aspects, the new law modifies retirement age, increasing it by 5 years. But this increase will be gradual.
From 2009 onwards, retirement age will be raised six months each year, up to the year 2018, when it would be established at 60 years for women and 65 for men. Its application during the next ten years defers the retirement of more than 285 thousand people, with a saving of 4.5 billion pesos to the Social Security coffers. In the mean time it has been decided to increase the retirement benefits and to establish other benefits.
Of course, things can and will be complicated by migration. I've blogged about the division between Cubas A and B, a relatively developed west and a relatively underdeveloped east that traditionally produces migrants. Let's not forget the United States, home to a Cuban-American community with members numbering more than a tenth of the population of Cuba itself and concentrated in a south Florida that's the nearest point of American land to Cuba itself, providing beside numerous human links to sustain chain migration.
These migrations, on top of the general population aging, will certainly have a major impact on Cuba's long-term prospects. Replacement migration is a possibility, I suppose, but where from? Cuba's high human development doesn't correspond to the sort of high economic development that attracts migrants. It may well be that even with a best-case post-Castro transition, Cuba's economic prospects may be hamstrung by an excess of seniors and an insufficiency of workers. What the consequences of this would be for Cuban stability I leave to others to imagine.