Demographic Transition: Denmark and (Have More) Sex Ed

(welcome back to Z!)

Demographics (Geography, really) have been in the news a lot lately, so finding a good starting point is difficult. Readers may remember (though it has been some time) that Z Geography has previously discussed the Stage 5 of the Demographic Transition (wherein a country experiences a declining population as birth rates fall below the death rate and net migration isn’t able to make up the difference).

There are two general ways to beat the falling population reality and both involve having more children (obviously). You either 1) incentive or coerce you’re existing national citizenry to have children or 2) you attract new peoples (say migrants) to shore up the population and hope that they have more children (which they typically do).

Denmark, it seems, is choosing the first course. A recent article in the Atlantic notes that sex education in the country was expanded last year to not only discourage teen pregnancy, but also “warning teens about the risks waiting too long to have children.” Presumably the “risks” referred to involve potential complications arising from so-called geriatric pregnancy.

Unlike its eastern Baltic NATO-ally Estonia (which Denmark had political control over in the 16th-17th century), Denmark’s population is not declining. Yet. According to my favorite U.S. government agency’s forecasts (the Census Bureau) Denmark will probably be in population decline by 2050. Estonia is already there. The Scandinavian neighbors Sweden and Norway are in a similar situation to Denmark. Each had an estimated total fertility rate of between 1.8 and 1.9 live births per woman (aged in her child-bearing years). Estonia’s is 1.6 births per woman.

Denmark has some time to figure out the winning policy formula. The problem is – does a winning policy formula exist? In Singapore (current fertility rate 0.8), a self-styled “sex guru” created a “love boat” getaway package in 2003. Spending $580 (U.S.) couples got a cruise, massages, aphrodisiacs, health classes, and other goods and services to put them in the baby-creating mood. Evidently the fertility rate has dropped since then.

Perhaps a more instructive case is the United States. In this country the total fertility rate (of all census respondents) is 1.9 births per woman, which is obviously below the replacement level of 2.1. Yet Census is not projecting a decline in the U.S. population – because of immigration. Senator Lindsey Graham (Republican, South Carolina) said it best in the past couple of weeks (via Politico):

  • [former South Carolina Senator] Strom Thurmond had four kids after age 67. If you’re not willing to do that, we need to come up with a new immigration system.

Whether he intended to or not (giving the Senator the benefit of the doubt here), Sen. Graham hit upon an apparent demographic truth. Given the economic imbalances in the global economic system, immigrants (from economically underdeveloped and often insecure countries) are needed to sustain the population’s of economically advanced and physically secure Western societies (like the U.S. and Denmark).

On this point, Denmark currently does not have a migrant resettlement quota (like the United Kingdom and Ireland) because of an existing exemption in the EU’s asylum policy. However,this may change and Denmark may take some asylees without a quota.

While the immigration “fix” to the demographic problem is easy, the implications are political. Europe was already experiencing a far-right and conservative backlash before the “migrant crisis” came to the fore (though why it wasn’t a crisis during the first 4 years of the Syrian Civil War is beyond the scope of this article). See headline (Jan-2015): Europe’s Anti-Immigrant Parties Stand to Gain Ground in Wake of Paris Attacks (Wall Street Journal). A key statement in the article is this: “Unlike in the U.S. or Canada, ethnicity and national identity remain closely intertwined in Europe. Melding Europe’s Muslim communities, which often are extremely devout, into Europe’s pluralistic, secular society is particularly tricky.” First and unfortunately for the majority of the world’s states – ethnic identity (to include race, language, religion, and other identifying markers) is the leading determinant for the conception of the imagined community – the nation. The U.S. and Canada, founded by immigrants and consistently reshaped by subsequent waves, are different (though angry nativist rhetoric always crops up during economic downturns).

The real catch is the second sentence – the interaction between immigrant communities and the host communities. But it is necessary to make a distinction, labor immigrants (for jobs) typically seek to immigrate and generally stay in the country, making a new life, often inviting family. Refugees are unwilling migrants. Most would probably wish to stay at home, if the home hadn’t been destroyed by a car bomb, a natural disaster, or some other cause of forcible displacement. Historically, migrants and host communities have integrated each other. Each changes (for the better) with each successive generation of children (migrants and hosts) going to school together and playing together. It was only a mere century ago when the Irish “need not apply” to jobs in and around U.S. metropolitan areas. Now Irish heritage is intertwined with American heritage.

A similar process is already at work within Europe, France and UK have experience accepting immigrants from the former colonies but the rest, including Denmark, must get used to the idea of becoming receivers of immigrants from abroad (whereas they were historically emigrants themselves) if they are to maintain population growth.

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The (Old) People’s Republic: Confronting Demographic Decline

The People’s Republic of China isn’t shrinking, yet. But it is certainly getting older, which presents a significant challenge to the country’s continued long-term economic growth. While the Communist Party of China is attempting to ensure growth through a few demographic policy instruments, some (including Z Geography) think that these are too weak and too late. Z Geography believes that the Communist Party is wary of stronger pro-natal policies because of the potential for demographic to outstrip economic growth, a future which could threaten the party’s singular hold over the country.

Z Geography stumbled upon a BBC article reporting that the PRC’s working age population decreased by over 2 million last year (uncited, of course). While statistics are always problematic (numbers have a nasty habit of differing based on source and definition), the statement in BBC appears sound. Unlike the BBC, Z Geography will give you sources. The U.S. Census Bureau’s International Data Base estimates that the working age population is shrinking.

The working age population is legally defined (in most cases), which provides effective bounding boxes for statistical estimates (of course,child labor isn’t captured in these statistics an important consideration for China). Article 15 of The PRC Labor Law prohibits employers from recruiting minors under the age of 16 (see the U.S. Library of Congress), with a few exceptions. As Bloomberg reports the current compulsory retirement age in China is 60 for males and 50 for females.

Utilizing 1-year age groups for males and females in China, Z Geography discovered that the PRC’s labor pool (16-59 for males, 16-49 for females) shrank for the first time in 2013. In 2012, 830 million (62% of the total population) were in these broad groups and available for (legal) economic employment. In 2013, their number fell to 826 million (61%). This population decline of about 4 million wasn’t due to a natural disaster, pandemic disease, or war – it was simple aging. Between those two years the population considered “elderly dependent” (60+ among males, 50+ among females) rose from 261 million to 274 million (an increase from 19% to 20%).

The Census population estimates over the long term expects a continuation of this trend. By 2025, the labor pool will have decreased by over 75 million persons to 817 million (53% of the population) and 403 million elderly dependents represent 28% of the population. One root of the problem lies in the low fertility rate of China’s women (thanks to the One Child Policy), tallying these ratios only 19% of the population is under the age of 16 (in other words, 19% of the population represents the country’s future workforce). In 2040, Census estimates 648 million workers (47%), 515 million elderly dependents (40%), 194 million youthful dependents (13%).

For comparative purposes, the U.S. in 2040 is expected to have 231 million workers (aged 15-64, 60% of the population) and 147 million elderly and youthful dependents.

More succinctly: by 2040, the number of retirees in China will be nearing the number of potentially active workers. While many of these retirees may have access to retirement benefits (presumably) it remains to be seen whether these benefits are sufficient to maintain quality of life for decades. For those without substantial benefits, or no benefits at all, they will have to rely on children or, more likely considering the one child policy, the government.

Recent news highlights at least two policy measures aimed at averting the potential economic consequences of having an overburdened workforce. The first, and somewhat earlier, concerns the infamous One Child Policy that stipulated below replacement-level family sizes. With few exceptions (minorities, rural inhabitants having a daughter, couples who are both only children) the law prohibited families from having more than one child. While the policy succeeded in slowing population growth it is one of the main causes of the declining labor force (another being emigration). The Times of India (via AFP) reported earlier in January 2014 that one province in China is relaxing the policy somewhat. The loosening of the policy, agreed to by Communist leaders in November 2013 and rubber stamped by the legislature in December, allows couples where at least one parent is an only child to have two children.

The Bloomberg article cited above highlights another policy approach, raising the retirement age.  As one analyst noted, this policy move provides a short term salve to the long term population shift predicted by relaxing the one child policy. The Party hopes that raising the retirement age will keep men and women in the workforce longer, increasing the labor pool in the short term, while more children are born. Of course, the labor pool won’t increase due to higher births for 16 years (when these babies enter the work force).

While Z Geography appreciates the complex approach taken by the Communist Party in stalling a potential economic crisis precipitated by demographics, I feel that the relaxation of the One Child Policy might not go far enough. The Party is presumably worried about relaxing the policy too much, thereby encouraging a baby boom that challenges social and political stability, if the economy can’t provide gainful employment for those youth. However, by taking a far more conservative approach (instead of scrapping the law altogether) the Party risks long term economic security, and its political legitimacy. If firms have to raise wages in order to compete for a smaller number of laborers, they may decide to relocate altogether. In fact, Bloomberg observes that Samsung has already decided to relocate to Vietnam (though Bloomberg doesn’t explicitly attribute that decision to rising labor costs). Steering a middle path is more likely an indication of the Party’s desire to hold on to power, rather than decisively correct the problem.

With enough cash, time may be on the Party’s side. As the BBC points out, another potential solution is increasing productivity of the labor pool. Increasing productivity with not only lower labor costs but make the lower birth rate easier to digest economically. However, the long term demographic question than becomes – as Japan has learned – how do families (and the state) care for an increasingly elderly population especially when the country’s population starts to decline (as China’s is expected to do by the mid-2020s)?

A less expensive and quicker way to increase the labor pool and birth rate is, as you may have guessed, immigration.

Japan’s Womenomics: a Demographic Perspective

Z Geography is out of town this weekend.

A 17 January (2014) USA Today article discusses Prime Minister (of Japan) Shinzo Abe’s proposal to expand child care and pressure on corporations to permit (up to) three years of maternity leave in an effort to increase women’s participation in the economy. Additionally, Abe reportedly instructed government ministries to “boost female workers and managers to 30% by 2020.” According to the article, the government believes these efforts will assist in reversing Japan’s “longtime economic slump” (though it is still the third-largest economy, behind the U.S. and People’s Republic of China).

Prime Minister Abe’s proposal will probably be meet with some indirect and subtle resistance, as the article notes. Women make up 42% of Japan’s workforce (compared to 47% in the U.S.) but only 11% of managers (43% in the U.S.). These statistics highlight whether the solution is rooted in women’s economic participation or, more likely, conservative attitudes preventing the employment of women in corporate leadership roles. As one quote illustrates “the business community is dominated by conservative, older-men who don’t’ want to let go of their privileges.” One observation casts doubt on the government’s motives, it has yet to introduce legislation to “strengthen labor or equal-opportunity” laws.

Taken together, Z Geography ventures that the government’s proposals have less to do with stoking an economic recovery through increased participation of women in the economy (which is the stated objective) and more to do with facilitating increased fertility for Japanese women already employed. True, more women will likely enter the economy thanks to increased child care opportunities and longer maternity leave – but these also benefit already employed women as well. Further as Z Geography and others have discussed, Japan faces a shrinking population (Stage 5 in the Demographic Transition Model) and increasing dependency ratio as proportionally fewer workers are economically available and the population of the elderly expands. These proposals, increasing child care and maternity leave, are likely aimed at increasing the fertility of women in Japan’s labor pool.

A country’s fertility rate is understood as the number of children that a woman will (probably) have over her child-bearing years. Thus, increasing the benefits (or subsidizing in this case) of child birth and rearing will spur employed women to have a child (or second or third). In the long term, these policies could increase the size of Japan’s labor pool, though this is uncertain. One uncertainty is how employed women react, for one women (and couples) may choose to have only one child, which is below replacement level fertility (2.1 children per couple with one child each for the parents and a “.1” child to account for those unable, or unwilling, to have children).

Over the short term, Z Geography questions the economic benefits of these proposals. Based on the statistics reported in the article, it seems that the problem lies not in the participation of women in the economy but a gendered “glass ceiling” that prevents their rise.

Finally, the government’s proposals ignore to other “quick” fixes for the economy and demography – immigration. Given that Prime Minister Abe and his party are considered “conservative” (according to the article), this is not unexpected. Despite this the influx of immigrants into Japan would facilitate an expansion of economic output (and the labor pool) while also increasing the birth rate. As one commenter in Z Geography observed (in no uncertain terms) however, national purity is at stake.

Entitlement Expansion and Aging in the United States

A recent New York Times article discusses Republicans’ desire to oust the Affordable Care Act (otherwise known as “Obamacare”) before the program becomes entrenched in the daily lives of the American citzenry. Should that happen, the belief goes, the program will become nigh-impossible to dislodge and will only expand. The article usefully places this in recent historical context (expansion of Social Security, and so on).

From my geographic/demographic standpoint the real interest was half down the first page where the NYT asserts (probably from an uncited Congressional Research Service report) that one reason for the expansion of “entitlement” programs since the 1960s has been the “aging of the population.”

Your Geographer (that is, me) explored the U.S. Census Bureau’s site (not their International Data Base) and compared the U.S.-wide summary results from the 1940 and 2010 Censuses to quantify this statement. I chose 1940 as it was the first Census conducted after Congress enacted Social Security in 1935 and its later expansion to cover dependents and survivors in 1939 (thanks NYT).

Understatement of the day: the U.S. has changed substantially since 1940. In 1940, the Census Bureau counted 131.6 million Americans. In 2010, there were 308.7 million Americans. In 1940, 4.6 million Americans were aged over 65 and were (ceteris paribus) eligible for retirement benefits (this 6.9% of the 1940 U.S. population). In 2010, 40.3 million Americans were aged 65 or older (13.0% of the 2010 U.S. population). To put it another way, there were more Americans in 2010 aged over 85 than there were Americans aged over 65 in 1940. This ten-fold increase in the number of elderly Americans, not to mention their growing proportion of the U.S. population, is due in no small part to changing fertility among U.S. families, improved healthcare, nutrition, and a number of other factors.

As the ratio of older Americans eligible for full retirement benefits (somewhere between 65 and 67 according to the Social Security Administration) grows larger the economic burden necessarily falls on a workforce that is proportionately smaller each generation.

To me there are a few solutions to this problem, all of which will probably tick off some political constituency. So we should seriously consider all of them. First, increase the retirement age. If there are more Americans aged over 85 now than there were Americans aged over 65 in 1940, why not make the full retirement age 70 or 75?  Second, immigration. If we (as a country) need workers and families to keep the economy humming immigration has always been the American solution. Third, more children. My least favorite idea, mostly because I don’t want the government telling me how many children to have. Further, this would only increase the burden on working adults by expanding the number of dependents; not only would a hypothetical American couple have to support both sets of parents they would also have to support three or four children.

A combination of increased retirement age and more open immigration policies (dare I say, a path to citizenship?) would be one way to keep the expansion of “entitlement” benefits in check, saving the system for future generations to (eventually) enjoy. The pending future, as various commentators have loudly argued, is a collapse in the Social Security system. Go write Congress.