In highly developed countries and economically fast developing countries there are analogous processes of changes in the demographic structure of society consisting in the aging of the population and the accompanying process of depopulation of cities, agglomeration, decreasing number of births, decreasing fertility rate in families. These processes, which are unfavorable for the economic development of the country, usually have at least several causes.
Extending the average life expectancy of citizens results from improved living standards, increased income and related improvements in quality of life, improvement of nutrition and improvement in the health care services sector. In addition, some of the lowly, educated people go to look for more interesting jobs and higher salaries by hiring in other countries. In a situation where young people paying off housing loans, are also burdened with various taxes, they are forced to work, to professional activity all adult members of the family of working age.
As a result, the pressure, the need to have more than 1 or 2 children are decreasing, and then the fertility decreases, which contributes to the decline in the number of citizens in the long term. In order to counteract this disadvantage for the national economy, this country should develop social policy to support young people, including subsidizing the purchase or rental of housing, establishing guaranteed income related to raising children, developing programs supporting the nursery, pre-school and education, pediatric health care system, etc.
Examples of such programs of active socio-economic policy are: Family 500 Plus Program and Flat Plus Program (Mieszkanie Plus Program). Because these programs have been developed only for 3 years, so you can not objectively assert how they affect the demographic structure of society, or motivate you to make decisions about having a larger number of children. In order to be able to answer this type of questions objectively, ie with regard to relevant scientific data, these Programs should be conducted with a minimum of 2-3 subsequent generations of citizens.
On the other hand, there has already been a noticeable increase in consumption for various types of goods purchased by citizens, which has a pro-development effect on the economy as it increases the level of economic growth. It may be one of the key elements of the socio-economic policy of anti-crisis, countercyclical importance, ie increasing the resilience of the domestic economy to global economic crises and the slowdown in global economy growth, e.g. the currently observed slowdown in global economy caused by the so-called war wars and other restrictions on the development of international trade.
In the context of the above issues, I am asking you the following question:
How can changes in the demographic structure of society affect the economic development of the country?
Please reply
I invite you to the discussion
Thank you very much
Best wishes
Paul: There are many demographic changes that can affect the economy. A few that come to mind are: age of the population; gender of population, urban versus rural living, education level, race, and marital status.
A significant change in any of these factors (above) can directly affect the economy's performance. This is why most government's collect data on these factors.
If there is a youth bulge as in case of many developing countries, economic development would be stifled if youth centric policies are not promoted. First and foremost is the better quality education and training for the youth to prepare them for vocational and professional fields so that they can be empowered economically. Then job creation policies by investments in new industries and services like innovation and technology is necessary. Then heterogeneities within the young population based on location and gender need to be considered to adopt targeted policies that focus on those locations like rural areas, shanti towns since we know lower income groups contribute most to population increase. The gender characteristics like female labor force need to be catered in specific job opportunities that employ and facilitate them. Also developing countries donot have pension structures for its aging populations and utilizing the experience of the segment of population that have reached 60 years or above also need to be optimized by innovation within employment structures of the country. Minorities need to be socially, economically and culturally empowered that can initiate an inclusive and multiethnic dialogue taking the country towards higher levels of social harmony and contribute to economic development further.
Paul: There are many demographic changes that can affect the economy. A few that come to mind are: age of the population; gender of population, urban versus rural living, education level, race, and marital status.
A significant change in any of these factors (above) can directly affect the economy's performance. This is why most government's collect data on these factors.
Changes in the demographic structure of the population are expressed through the natural and mechanical movements of the population. Taking into account that in many countries the birth rate decreases while external migration increases, this significantly affects the economic development of the countries. It is therefore necessary to create appropriate demographic policies and, most importantly, to be practiced.
I agree with your opinions on this topic. Yes, since the development of civilization, economic systems of countries in antiquity, economic growth is correlated with demographic growth. However, this is not always the same correlation and in various periods the strength and translation of this correlation has changed. Sometimes, in short periods and situations of economic crisis, a shortage of basic consumer products, this correlation was disturbed.
Usually this is a positive correlation with a changing range of direct proportionality. What is the scope of proportionality and how it changes over time depends on many other objective social, cultural, economic factors etc. as well as on random factors such as natural, cosmic cataclysms, epidemics, wars, etc. In addition, changes are important demographic structure of society.
In the currently functioning economies of highly developed countries, the process of economically negative changes in the demographic structure of societies known as the aging of the population has been observed for many years. This process is also correlated with the potential of the workforce, measured by the number of people able to work, at the productive age, with a certain level of education, able to retrain or specify a given productivity.
The process of changing the demographic structure, defined as the aging of the population, is usually inversely correlated with the economic growth. It results from the specificity of the dominating factors of the sources of the aging process of society. These factors usually include a decrease in births, a reduction in the fertility rate in families, an increase in incomes and a better standard of living for citizens, including healthier nutrition, improvement of health care system services, etc. Sometimes this process is also determined by the departure of young educated people from the country the limit of the purpose of employment in positions with higher remuneration.
For modern economies in which social support systems and participatory pension systems operate, linked directly or indirectly to the public finance system of the state, aging of the population is a source of rapid growth of state budget expenditure and in most countries of the world is one of the key factors in the emergence and increase of the budget deficit in the state budget, also increase public debt.
If there is no possibility of balancing the state budget from additional income, if these additional incomes are not then social assistance systems and public pension systems are reformed. The purpose of the reform is usually to reduce spending on state finances, and thus to decrease the purchasing value of pensions and benefits, and to partially or partially privatize the pension system by creating commercially active and managed open pension funds investing citizens' retirement contributions, future retirees in various financial instruments of commercially operating financial markets, i.e. primarily the money and capital markets.
Such processes have been taking place since the end of the 1990s in the country where I operate. such reforms were carried out. In order to slow down the economically unfavorable process of aging, pro-social programs have been introduced that are key pillars of the current socio-economic policy, ie the Rodzina 500 Plus Program and the Flat Plus Program (Mieszkanie Plus). I described these processes and programs in my publications available on the Research Gate portal.
What do you think about this topic?
What's your opinion on this topic?
Do you agree with me on the above matter?
Please reply
I invite you to the discussion
Thank you very much
Best wishes
Dariusz Prokopowicz
Great choice of topic for discussion. I think David Vazquez-Guzman sums it up well in a short paragraph about the inherent paradoxical aspects of demographic changes. I'm going to pick only one aspect to keep it short here: We all know that Economic Growth = % Change in Productivity (P) + % Change in the Labor Hours Worked (L). As such, economic growth apparently is affected by a number of factors such as the labor productivity and its growth, the labor force participation rate, the number of work hours in a society, savings rate, investments, government policies etc. I guess the ultimate question is: How do we unleash the forces of the markets in order to affect both (P) and (L) components of economic growth? As the saying goes, unfortunately it's always easier said than done.
A large population of military age males enhances a country's vulnerability to political instability and internal war, especially when there is high unemployment.
Another consideration is, especially if there is a large military-age male population, where the bulk of that population is located. In rural areas the an insurgency of some sort is probably most likely. In more urban areas something more directly related to ideas associated with Carlos Marighella. Both incorporate the use of terror but can differ between its tactical and strategic use. This difference implies at the least the possibility of different means for countering and the budgetary impact can be substantial. There are very likely to be effects related to the flow of information which can impede market functioning.
It is unfortunate how Neoclassics (and New Classics and New Keynesianism) has spoiled the brains of so many economists. Mainstream economics has forgotten, what is or should be the main aim of an economy: the - not only - material welfare of people. They do not recognize that growth has limits and that it may damage environment and climate. The formula %GDP=%P+%L (with P average productivity and L total working hours) is tautologically correct, but useless or maybe even misleading. They can lead politicians to introduce measures to increase population growth or to increase working time (or as an argument against reducing it). I am not against growth, for many countries it may be necessary to reach a satisfactory standard of living, but one should not overlook the role of distribution. If possible, growth should be more of qualitative than quantitative character. A thinking experiment how different (even convenional) growth can be:
Case 1: population and workforce growth of 1%, increase of the unemployment rate 2%, but employed work 2% more hours
Case 2: constant population but decrease of workforce of 1%, decrease of unemployment rate 2% and 1% less working hours
With the same productivity growth, total growth would be about 1% higher in Case 1. Nevertheless, I would prefer Case 2.
Ageing is, for most economists, seen as negative as old people (pensioners) are not productive. In fact, it is a positive sign for a society, especially when people grow older in good health (If one looks at old photos, one can often see persons of about 40 years old looking like those nowadays between 50 and 60). Their consumption makes an important share of effective demand and is a strong economic impulse. A high share of old-age-pensioners is, nevertheless, problematic, because it leads to high contributions of the active population (if we do not want to reduce pensions and thus weaken demand). Therefore, a stepwise increase of the pension age is a good measure (although not very popular), but - what is mostly foregotten - should be accompanied by measures to reduce annual working time to compensate its labour supply effect (at least as long unemployment is too high).
If the population decreases, consumption and production decrease. By default it reduces development. (a simplistic explanation)
This question has different aspects, but I would say that changes in the demographic structure of the society like: lower growth in population and or increasing older population than the rest directly affecting the labour input and downward pressure on the growth rate of potential output. Also, these changes influence the business cycle and the monetary policy transmission mechanism. Monetary policymakers will need to continually evaluate these structural and cyclical effects in determining appropriate policy. In short, the government has to implement proper demographic policy so that to solve the problems in this sphere in time.
Anton,
A demographic policy aims at maintaining and or changing the dynamics of the size and structure of the population, based on purposeful actions to regulate population growth via government bodies and other social institutions. İt is a set of procedures designed to influence population growth and movement directly and indirectly in accordance with predetermined objectives. Such policies can affect age-sex distribution, marital patterns, health, and the geographical distribution of people within a country. Almost every country conducts demographic policies in their countries but not all of them are successful and achieve their targets. A proper demographic policy is the appropriate and successful policy that achieves its targets/aims and as a result, it has positive effects on the economy of a country
Drastic reduction in child and maternal mortality preceded the British Industrial revolution. So did a pervasive increase in literacy. Both factors were followed by a decrease in completed family size. The switch from quantity to quality of children?
Dear Colleagues and Friends from RG, On the basis of the above considerations and conclusions from the discussion on interesting issues discussed, I formulated the following thesis that there are many examples known from the history of economic development of many countries confirming the thesis indicating the existence of correlations between long-term ongoing processes of changes in the demographic structure of the society and economic growth, and also between applied Keynsian, pro-development socio-economic policy and a change in the demographic structure of society. I described this issue on the example of the Family 500 Plus Program and Flat Plus Program (Mieszkanie Plus Program) used in socio-economic policy.
In the context of the above considerations, the following key questions arise:
- In which countries can we present examples confirming the existence of correlations between the long-term ongoing processes of changes in the demographic structure of the society and economic growth, and also between the applied Keynsian, pro-development socio-economic policy and the change in the demographic structure of the society?
- What instruments of long-term pro-development Keynesian socio-economic policy are used to revive economic processes, improve the income, material and housing situation of citizens, which also results in an increase in consumption, improvement of economic conditions in life and often also an increase in fertility and changes in the demographic structure of society?
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