Chart 1. Size of the world's population, Year

Transcription

1 The Demography of the Labor Force in Emerging Markets David Lam, University of Michigan Jackson Hole Economic Policy Symposium Re-Evaluating Labor Market Dynamics Federal Reserve Bank of Kansas City August 21-23, 2014 I. Background: The Rise and Fall of Rapid Population Growth Chart 1. Size of the world's population, Billions Least developed Other less developed India China More developed 1950 Year Note: World Population Prospects: 2012 Revision, Medium Variant Chart 2. Annual Population Growth Rate for World and Major Regions Annual growth rate Europe Asia Sub-Saharan Africa Latin America World North America 1950 Source: UN Population Division 2012, Medium Variant 1

2 II. The Demographic Transition and Rapid Fertility Decline Chart 3. Crude Birth Rate, Crude Death Rate, and Rate of Natural Increase, (Rates per 1000 population) World Latin America Crude Birth Rate Rate of Natural Increase Crude Death Rate Crude Birth Rate Rate of Natural Increase Crude Death Rate Asia Sub-Saharan Africa Crude Birth Rate Rate of Natural Increase Crude Death Rate Crude Birth Rate Rate of Natural Increase Crude Death Rate Note: World Population Prospects: 2012 Revision, Medium Variant Chart 4. Total Fertility Rate for World and Major Regions Births per woman Asia World North America Europe Replacement Latin America Sub-Saharan Africa Year Note: World Population Prospects: 2012 Revision 2

3 III. The Demography of the Labor Force Chart 5. Size of the world's working-age population, Billions Least developed Other less developed India China More developed 1950 Year Note: World Population Prospects: 2012 Revision, Medium Variant Chart 6. Age composition of the world's working-age population, Billions Age Age Age Year Note: UN World Population Prospects: 2012 Revision, Medium Variant 3

4 Entry, exit and net increase of the working-age population Chart 7. Annual growth of working-age population, by components, Asia-numbers Asia-annual growth rates Millions Proportion of labor force Latin America-numbers Latin America-annual growth rates Millions Proportion of labor force Sub-Saharan Africa-numbers Sub-Saharan Africa-annual growth rates Millions New entrants Net growth Aging out Deaths Proportion of labor force New entrants: Number who turn age 15 between t-1 and t; Aging out: Number who turn age 66 between t-1 and t; Deaths: Number of deaths in the age group between t-1 and t. 4

5 How many million workers are added to the labor force each year? Chart 8. Annual growth of working-age population, 1975, 2015 and 2030 Millions added per year Annual growth rate Bangladesh Bangladesh Brazil Brazil China China Ethiopia Ethiopia Germany Germany India India Indonesia Indonesia Mexico Mexico Nigeria Nigeria Pakistan Pakistan USA USA Population aged 15-64, UN Population Prospects: 2012 Revision, Medium Variant Projections India is currently adding over 1 million people per month to working-age population, an annual growth rate of 1.6% Ethiopia s working-age population is growing at 3.8% per year China s working-age population will be declining 0.5% per year in 2030 Growth rate of working-age population is falling in most countries, but is increasing in Nigeria, reaching 3% per year in

6 Table 1. Size of Working-Age Population for World and Subgroups, Population aged (Millions) Change % Change Change A. World 3,858 4,817 5, % % B. Economic regions More Developed % % Less Developed: China 865 1, % % India , % % Other Less Developed 1,192 1,586 1, % % Least Developed % % C. Geographic regions Asia 2,369 2,986 3, % % Europe % % Latin America % % North America % % Sub-Saharan Africa % % D. Age groups Age % % Age % % Age % % World minus Sub-Saharan Africa E. Age groups Age % % Age % % Age % % Total % % Source: UN World Population Prospects 2012 Revision, Medium Variant Projections % Change

7 Chart 9. Percentage increase in size of age groups in working-age population, 2015 to 2030 Europe Age Age North America Age Age World minus SSA Asia World Latin America Sub-Saharan Africa Percentage increase Source: World Population Prospects: 2012 Revision, Medium Variant 7

8 IV. Did rapid population growth slow down the accumulation of human capital? 100% Chart 10. Percentage of cohort with primary schooling, by year cohort was age 10, Thailand and Brazil. 90% 80% 70% Thailand male Thailand female 60% 50% 40% 30% 20% 10% 0% Year cohort was age % 90% 80% Brazil male Brazil female 70% 60% 50% 40% 30% 20% 10% 0% Year cohort was age 10 Note: Data are three-year moving averages based on 2000 census data accessed via IPUMS- International (Minnesota Population Center 2014) 8

9 V. Do changes in labor force growth affect youth unemployment? Chart 11. Youth unemployment rate by youth proportion of the working-age population Youth unemployment rate More developed countries Less developed countries OLS regression line Youth proportion of working-age population Source: ILO KILM data for most recent year Chart 12. Youth unemployment rate and growth rate of youth population, Brazil Youth unemployment rate Youth unemployment rate Youth pop. growth rate Year Youth population growth rate Note: Youth unemployment rate based on ILO Key Indicators of the Labor Market 8 th Edition (2014). Population estimates taken from UN World Population Prospects 2012 Revision. 9

10 Table 2. OLS Regressions: Dependent variable is log of male youth unemployment rate, developing countries, Log (Pop 15-24/Pop 15-59) Annual growth rate of Population Annual growth rate of GDP [0.365] [0.290] [1.556]*** [0.876]*** [0.890]** [0.323]*** Country fixed effects X Year fixed effects X N R Years Most recent All years Robust standard errors in brackets * significant at 10%; ** significant at 5%; *** significant at 1% Interpretation: The coefficient of on the annual growth rate of population implies that increasing the growth rate by one percentage point would increase male youth unemployment by 4.8 percent. The mean youth unemployment rate is about 18%, so this would imply an increase of about 1 percentage point. 10