Population Aging and its Economic and Fiscal Impacts in Latin American and the Caribbean 13 November 2011, Mexico City Tim Miller Population Affairs Officer Comisión Económica para América Latina y el Caribe

The Demographic Story Increasing longevity and reductions in family size  Dramatic shifts in age structure of the population.

Malmberg’s Four Stages of the Demographic Transition Child abundant societies (Ages 0-19)  Young adult abundant (Ages 20-39)  Middle-age adult abundant (Ages 40-59)  Elderly abundant (Ages 60+).

Child Abundant: Brazil 1966

Young Adult Abundant: Brazil 2024

Middle Age Adult Abundant: Brazil 2044

Elderly Abundant: Brazil 2080

1950: All societies are child abundant. Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, U.S., Uruguay

1980: The emergence of young adult abundant societies. Brazil, Costa Rica, Jamaica, Mexico, Trinidad & Tobago Argentina, Canada, Chile, Colombia, U.S., Uruguay

2010: The emergence of middle-age adult abundant societies. Brazil, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago Argentina, Canada, U.S., Uruguay

2040: The emergence of elderly abundant societies. Argentina, Brazil, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, Uruguay Canada, U.S.

2070: The global spread of elderly abundant societies. Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, U.S., Uruguay

2100: The global dominance of elderly abundant societies. Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, U.S., Uruguay

The Economic Story Economic activity varies by age. (The Generational Economy)  Shifts in age structure impact the economy.

Where can we find this economic data by age?  The National Transfers Account Project aims to measure the economic impact of population aging.  Applies the same methodology of measuring economic activity by age to countries around the world. Currently, 36 countries.  Project is directed by Ronald Lee (UC Berkeley) and Andrew Mason (East-West Center).  CEPAL is the regional coordinator, supported with a grant from Canada’s IDRC.

NTA Country Teams Argentina Pablo Comelatto Jorge Paz CENEP Brazil Cassio Turra Bernardo Lanza CEDEPLAR Canada Marcel Merette Qi Zhang Yuan Liu University of Ottawa Colombia Piedad Urdinola Universidad Nacional de Colombia Jorge Tovar Universidad de los Andes Costa Rica Luis Rosero-Bixby Pamela Jiménez-Fontana CCP, Universidad de Costa Rica Jamaica Maurice Harris PIOJ Mexico Félix Vélez, Iván Mejía, Juan Enrique Garcia CONAPO U.S. Ronald Lee University of California at Berkeley Andrew Mason East-West Center Uruguay Marisa Bucheli Cecilia González Universidad de la República

Economic Activity Varies by Age Consumption Labor income

Examples of age-based economic projections Economic activity varies by age. (The Generational Economy)  Shifts in age structure impact the economy.

Example 1. Population Aging and Economic Growth All populations pass through a period in which the population is concentrated among working-age adults. This period is particularly favorable to economic growth as the potential workforce grows more rapidly than the population dependent on it. The demographic dividend lasts for a few decades. At its peak, it can contribute in excess of 1% to the annual growth in GDP per capita. See work of Bloom, Canning, Sevilla, Lee, and Mason.

: Percent change in GDP/capita due to age structure change : Percent change in GDP/capita due to age structure change.

: Percent change in GDP/capita due to age structure change : Percent change in GDP/capita due to age structure change.

: Percent change in GDP/capita due to age structure change.

Example 2. The emergence of Aged Economies Aged Economies (in which resource devoted to elderly exceed those of devoted to youth) are a new phenomena and will become the dominant form of economy over the course of this century. This has important implications for the growth of health care spending in all economies throughout the world.

The National Transfer Account (NTA) Project measures economic activity by age. Consumption Labor income

1980: No Aged Economies in the World Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, U.S., Uruguay

2010: 23 Aged Economies Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, U.S., Uruguay

2040: 89 Aged Economies Argentina, Colombia, Jamaica, Mexico Brazil, Canada, Chile, Costa Rica, Trinidad & Tobago, U.S., Uruguay

2070: 155 Aged Economies Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, U.S., Uruguay

2100: 193 Aged Economies in the World Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Jamaica, Mexico, Trinidad & Tobago, U.S., Uruguay

Example 3. HEALTHY POPULATION PARADOX

People are living longer

The Population is Growing Older

People are living longer + Population is growing older = Healthy population paradox Even though each individual in the population is living longer… The proportion of people who are near death is increasing.

Demographic pressures on health systems expected to increase dramatically.

Example 4. Health Expenditure Forecasts Health expenditures vary by age.  Shifts in age structure impact health spending.

Relative health spending per older person much higher in high income countries.

Fiscal impact of population aging likely to be as large in Latin America as in European Union.

Demography matters. Conclusion