Final assignment - Consequences of Demographic Change

International journal of economics and finance, 2012

In the present research article, we outline the distinction between the demographic dependency ratio and the economic dependency ratio and present its evolution in Romania within the European Union, but not restrictive to the EU27. The evolution of demographic dependency ratio changed dramatically in Romania in the last 15 years comparing to the UE27. On the other hand, the evolution of economic dependency ratios is much more relevant because it also reflects the problems the economy is facing and should be brought to the fore in the political debates and to decision makers. In the paper we present the factors that are leading to the increase of the economic dependency ratio and we conclude with the solutions which a state has to adopt in order to prevent excessive public debt and structural gaps due to long term rise in economic dependency ratio. Moreover, policy-makers must face up the painful inter-temporal transfer choices that have to be done. Our concern about Eastern-European Countries is strengthened by the global results reached by OECD through Minilink Model Study, IMF Study of G7 and QUEST II Model that suggest the fall of the living standards over the next 50 years due to economic dependency ratio. For Romania we considered two main solutions to this problem: increasing birth rate (long term solution) and lowering the unemployment rate through investment and a high rate of EU funds absorption (medium term solution).

Geriatrics and Gerontology International, 2005

Dependency ratios are derived from the proportion of so-called dependents in a society in comparison to the workforce. With an ever-increasingly aging society, governments need some form of projected measurements in order to plan for future spending. A dependency ratio is one tool that is employed for this purpose. However, there are many flaws in the use of this equation in terms of the assumptions made regarding the workforce, what is considered to be productivity, as well as changing economic outlooks over time. Older people are assumed to be a heterogonous group and are certainly considered to be dependent once the age of 65 is reached in many countries. With people living longer and maintaining better health into old age, it may be time to reconsider the use of dependency ratios. This paper discusses the problems with the current definition and uses of this demographic measurement.

The present chapter examines past and projected population trends and assesses the implications of these latter trends for dependency ratio developments. The essential feature to highlight regarding past and current developments is the extent of the demographic upheaval which has and is occurring, due to falling birth rates and lengthening life spans. As regards future projections, while uncertainties exist, especially regarding the evolution of fertility rates, one fact appears indisputable namely that large increases in the share of the over 65s in the populations of the EU15, US and Japan will inevitably occur due to the fact that the post-war baby-boom generations in the latter areas will be reaching the normal retirement age in the early decades of the next century. It is envisaged that this ageing process, leading to higher dependency ratios in all of the three regions, will have major economic and social consequences for the countries affected, although accurate predictions will be difficult given that nothing is available in terms of historical demographic precedents.

2006

Russian Journal of Economics , 2018

The current stage of demographic changes in all countries that have experienced a demo graphic transition is characterized by two main features: (1) cessation of population growth; (2) a progressive increase in the total dependency ratio, which until recently, de spite the longrun population ageing, was declining. Both of these features are unfavorable from the economic point of view. In Russia, the situation is aggravated by the peculiari ties of the population pyramid, heavily deformed by the social and military upheavals of the 20 th century. The article shows that, for a long time, the demographic trends in Russia favored its economic development, but now the country is entering a long period of unfavor able demographic changes. The cessation of growth of the Russian population, the reduc tion in the workingage population and its ageing and the increase in the dependency ratio will have a deterrent effect on economic development and, at the same time, make it more difficult to solve social problems. In particular, these factors will create greater problems for the pension system for people older than working age. The issue of using the migration resource to mitigate the negative consequences of demographic changes is discussed.

LUMEN Proceedings, 2019

In Romania, as in most European countries, there is a tendency of demographic aging. This trend is based on two essential causes: a constant increase in life expectancy at birth and a decrease in birth rates. The demographic aging phenomenon has both direct and indirect consequences on the short-, medium-and long-term economic and social life of economic growth. The process of replacing generations in active working groups with those under the age of 24 will be affected as a result of demographic imbalances. Increasing the share of the elderly population will directly lead to increased economic pressure on people in active age groups. The question is, "Can the reduction in the share of the active population in the total population be offset by a corresponding increase in productivity?" If such compensation is not feasible, the likelihood of imbalances in the long run is relatively high. These imbalances are not only of an economic nature but can affect well-being in all its aspects.

WP-16-024, 2016

BACKGROUND Sanderson and Scherbov (2015) demonstrated that there was an inverse relation between the speeds of aging as measured by the conventional and the prospective oldage dependency ratios. OBJECTIVE and METHODS Here, we examine this counterintuitive finding analytically and with simulations. To this end, we decompose changes in mortality schedules into shift and compression processes. After studying the effects of these two processes on the dependency ratios analytically, we examine the effects empirically, using the HMD data. RESULTS Theory shows that the two mortality processes (of shift and compression) push the two old-age dependency ratios in opposite directions. Our formal results are supported by simulations that show a positive effect of a mortality shift on the conventional old-age dependency ratio and a negative effect of it on the prospective old-age dependency ratio. The effects are of opposite sign for the mortality compression. The analytical and empirical results also suggest the effect of the shift is stronger than the effect of compression. Hence, mortality declines, typically, imply increasing conventional but decreasing prospective old-age dependency ratios. CONCLUSIONS Our formal and empirical results taken together they suggest that the inverse relation between the conventional and prospective old-age dependency ratios is a universal feature of human mortality change. CONTRIBUTION This paper contributes to the literature on formal demographic analysis, particularly on the effects of mortality shifts and compression on dependency ratios. It demonstrates that the counter-intuitive finding in Sanderson and Scherbov (2015) is a fundamental feature of human mortality change. We also contribute in showing usefulness of the shift-compression decomposition model of mortality change developed in (Dalkhat M. Ediev 2013).

Theoretical Population Biology, 2018

Unlike other biological populations, the human population is experiencing long-run increases in life expectancy. Those lead to changes in age compositions not typical for other biological populations. Sanderson and Scherbov (2015a) demonstrated that, in many countries in Europe, faster increases in life expectancy lead to faster population aging when measured using the oldage dependency ratio and to slower population aging when measured using the prospective oldage dependency ratio that employs a dynamic old-age threshold. We examine this finding analytically and with simulations. We use an analytic decomposition of changes in mortality schedules into shift and compression processes. We show that shifts and compressions of mortality schedules push the two old-age dependency ratios in opposite directions. Our formal results are supported by simulations that show a positive effect of a mortality shift on the old-age dependency ratio and a negative effect of it on the prospective old-age dependency ratio. The effects are of opposite sign for a mortality compression. Our formal and simulation results generalize observed European trends and suggest that the inverse relationship between life expectancy and prospective old-age dependency would be observed more generally.

Review of Income and Wealth, 1997