Economic Impacts of Population Change After Malaria Eradication

Economic Impacts of Population Change

After Malaria Eradication

Conference on Health Improvements for Economic Growth

Cambridge, Massachusetts

May 30, 2007

Gretchen Donehower

UC Berkeley Department of Demography

Outline

• Review demographic scenarios

• Introduce model linking population inputs with economic outputs

• Examine economic outcomes under different population scenarios

• Discuss implications and other possible linkages

Demographic Scenarios - Mortality

Probability of Death in Interval (nqx), Zambia Population Scenarios

0.0

0.2

0.4

0.6

0.8

1.0

0-4

5 - 9

10 -

14

15 -

19

20 -

24

25 -

29

30 -

34

35 -

39

40 -

44

45 -

49

50 -

54

55 -

59

60 -

64

65 -

69

70 -

74

75 -

79

80 -

84

85 -

89

90 -

94

95 -

9910

0+

Age

Pro

ba

bili

ty o

f De

ath

in A

ge

Inte

rva

l (n

qx)

Before Malaria EradicationAfter Malaria Eradication


Large mortality reduction at youngest ages


0.0

0.2

0.4

0.6

0.8

1.0

0-4

5 - 9

10 -

14

15 -

19

20 -

24

25 -

29

30 -

34

35 -

39

40 -

44

45 -

49

50 -

54

55 -

59

60 -

64

65 -

69

70 -

74

75 -

79

80 -

84

85 -

89

90 -

94

95 -

9910

0+

Age

Pro

ba

bili

ty o

f De

ath

in A

ge

Inte

rva

l (n

qx)



Much smaller reductions at older ages


0.0

0.2

0.4

0.6

0.8

1.0

0-4

5 - 9

10 -

14

15 -

19

20 -

24

25 -

29

30 -

34

35 -

39

40 -

44

45 -

49

50 -

54

55 -

59

60 -

64

65 -

69

70 -

74

75 -

79

80 -

84

85 -

89

90 -

94

95 -

9910

0+

Age

Pro

ba

bili

ty o

f De

ath

in A

ge

Inte

rva

l (n

qx)


Demographic Scenarios - Fertility

Difference of 0.18 births per woman

Demographic Scenarios - Fertility

Demographic Scenarios - Age Structure


Initial impact: younger population due to more

child survival


Eventual impact: older population due to

lower fertility

Demographic Scenarios - Population Growth

Population Growth Rates

0.000

0.004

0.008

0.012

0.016

0.020

2005 2030 2055 2080 2105

Year

An

nu

aliz

ed

Gro

wth

Ra

tes

Before Malaria Eradication


Model Motivation

• Hold institutional setting fixed– care of young dependents by family and

government– care of elderly dependents by family, government

and own saving

• Use what we have learned in the National Transfer Accounts (www.ntaccounts.org) project about the age-shape of economic activity in different types of countries

Model

• Cross-sectional profiles of labor income (Yl) and consumption (C) have fixed shape– but levels change over time

• Aggregate lifecycle wealth (W) for adults determined by the profiles and population: – W=PV(C) - PV(Yl)

• Lifecycle wealth held as W=A+ Tp+ Tk:– assets (A)

– transfer obligations from gov’t and own children (Tp)

– transfer obligations to children (Tk)

Model (continued)

• Key assumptions– Assets and transfers are constant fraction of pension

wealth (Wp=A+Tp)

• Tp(t) = Wp(t)

• A(t) = (1-) Wp(t)

– Level of Yl profiles determined by economic growth in open economy.

• With these assumptions, we can solve for levels of C profiles over time, backwards from steady state with stable population

Model Inputs

Profiles of Consumption and Labor IncomeIndonesia 1996, Modified

0

0.2

0.4

0.6

0.8

1

0 10 20 30 40 50 60 70 80 90

Age

Pro

file

Re

lativ

e to

Ave

rag

e Y

l, a

ge

30

-49 Labor Income

Consumption

Alternate Labor Income Profile(higher child labor force participation)

`

Model Inputs (continued)

• Productivity growth 1.5%• Depreciation rate 3%• Discount rate 3%• Interest rate 5%

• Family share of 0.67transfers to children

• Transfers as a share 0.80of pension wealth ()


• Baseline and malaria eradication scenarios use these profiles and inputs

• Additional simulation includes change in female labor force participation (LFP)– female LFP increases as fertility declines, proportional

to decline beyond baseline

– assumes a birth takes a woman out of the labor force for one year

– with fewer births, age-specific increase in Yl profile over time


Support Ratio:

ratio of population weighted by labor income profile to population weighted by consumption profile

Support Ratios

0.88

0.90

0.92

0.94

0.96

0.98

1.00

1.02

1.04

2000 2020 2040 2060 2080 2100 2120

Year

Effe

ctiv

e P

rod

uce

rs P

er

Effe

ctiv

e C

on

sum

er



Additional Increase in Female LFP

Model Outputs

Saving

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

2000 2020 2040 2060 2080 2100 2120

Year

Pro

po

rtio

n o

f To

tal O

utp

ut S

ave

d




Model Outputs

Saving

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

2000 2020 2040 2060 2080 2100 2120

Year

Pro

po

rtio

n o

f To

tal O

utp

ut S

ave

d



Additional Increase in Female LFP After Malaria Eradication:

Greater saving by adults required to pay for faster population growth and more young dependents.

Model Outputs (continued)

Assets

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

2000 2020 2040 2060 2080 2100 2120

Year

Ass

ets

pe

r D

olla

r o

f La

bo

r In

com

e





Assets

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

2000 2020 2040 2060 2080 2100 2120

Year

Ass

ets

pe

r D

olla

r o

f La

bo

r In

com

e




After Malaria Eradication:

Greater assets accumulated between period of initial higher saving and period of population aging.


Differences from baseline (before malaria eradication) are very small.

GDP Per CapitaRelative to Baseline Scenario

0.985

0.990

0.995

1.000

1.005

1.010

2000 2020 2040 2060 2080 2100 2120

Year

Alte

rna

tive

/ B

ase

line

GD

P P

er

Ca

pita



Review of Results

• In the near term, small strain on per capita resources; in the long term, small gains are realized.

• Changes in model inputs have very strong influence on outcome levels, but not on difference from baseline.

• Other potential positive effects likely to have larger impacts than population age structure or growth rate.

Acknowledgements

• The National Transfer Accounts project received core funding from the National Institutes of Health, NIA, R01-AG025488 and NIA, R37-AG025247, principal investigators Ron Lee and Andy Mason.

Documents

Economic Impacts of Population Change After Malaria Eradication