Impact of Population Change on Global Economy: Data Analysis

 
Six Ways Population
Change Will Affect the
Global Economy
 
Part II: Data and Methods
Andrew Mason
 
Overview
 
Provide technical details about the paper Mason,
Lee, and members of the NTA Network (2021
forthcoming) Six Ways Population Change Will
Affect the Global Economy
Presentation is intended for researchers who would
like to construct measures used in this paper.
The emphasis is on constructing measures for an
individual country not regional or global values.
 
Data Requirements
 
Population data
Annual estimates and projections, both sexes combined, by
single years of age (medium scenario).
Available from the UN World Population Prospects website.
Alternatives may be available from National statistical
agencies.
 National Transfer Accounts data
Per capita consumption and labor income by single year of
age, a recent year
Components of consumption (public and private education,
health, and consumption other than education and health)
Additional data explained as we go along.
 
Measures covered
 
Effective labor, labor productivity, and GDP
Consumption by broad age groups
Support ratio and first dividend
Old-age gap
Lifecycle pension wealth
 
Estimating Effective Labor
 
Effective labor is used to assess the impact of population on GDP
and to project GDP
Refinement of the working age population with age-specific
weights based on the normalized labor income profile.
Normalized labor income age profile is calculated as per capita
labor income divided by the average of per capita labor income of
persons 30-49.
People of age 30-49 are counted as one effective worker.  Those
at other ages are counted as more or less than one depending on
how their labor income compares with those of age 30-49.
Aggregate effective labor at each age is product of population age
x in year t and the normalized labor income at age x.
Summing across all ages yields total effective labor in year t.
 
GDP and its two components
 
GDP has two components:  GDP = w x L
Effective labor (L) is calculated as explained in the previous
slide.
Productivity is calculated using GDP and effective labor
(w=GDP/L)
GDP growth is equal to
 
gr(GDP) = gr(w) + gr(L)
Historical estimates of w can be used to provide a
simple estimate of future productivity.
Combining projected w with projected L provides an
assessment of the impact of population on L or GDP.
Population has other complex effects on w that are not
captured by this simple method.
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This paper by Mason, Lee, and members of the NTA Network discusses the impact of population change on the global economy. It provides technical details on constructing measures for individual countries using population data and National Transfer Accounts data. The measures covered include effective labor, GDP, consumption patterns by age groups, support ratio, and more. The paper also delves into estimating effective labor and the components of GDP. Researchers can use this information to analyze how population dynamics affect economic indicators.

  • Population Change
  • Global Economy
  • Data Analysis
  • Labor Productivity
  • GDP Growth

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  1. Six Ways Population Change Will Affect the Global Economy Part II: Data and Methods Andrew Mason

  2. Overview Provide technical details about the paper Mason, Lee, and members of the NTA Network (2021 forthcoming) Six Ways Population Change Will Affect the Global Economy Presentation is intended for researchers who would like to construct measures used in this paper. The emphasis is on constructing measures for an individual country not regional or global values.

  3. Data Requirements Population data Annual estimates and projections, both sexes combined, by single years of age (medium scenario). Available from the UN World Population Prospects website. Alternatives may be available from National statistical agencies. National Transfer Accounts data Per capita consumption and labor income by single year of age, a recent year Components of consumption (public and private education, health, and consumption other than education and health) Additional data explained as we go along.

  4. Measures covered Effective labor, labor productivity, and GDP Consumption by broad age groups Support ratio and first dividend Old-age gap Lifecycle pension wealth

  5. Estimating Effective Labor Effective labor is used to assess the impact of population on GDP and to project GDP Refinement of the working age population with age-specific weights based on the normalized labor income profile. Normalized labor income age profile is calculated as per capita labor income divided by the average of per capita labor income of persons 30-49. People of age 30-49 are counted as one effective worker. Those at other ages are counted as more or less than one depending on how their labor income compares with those of age 30-49. Aggregate effective labor at each age is product of population age x in year t and the normalized labor income at age x. Summing across all ages yields total effective labor in year t.

  6. GDP and its two components GDP has two components: GDP = w x L Effective labor (L) is calculated as explained in the previous slide. Productivity is calculated using GDP and effective labor (w=GDP/L) GDP growth is equal to gr(GDP) = gr(w) + gr(L) Historical estimates of w can be used to provide a simple estimate of future productivity. Combining projected w with projected L provides an assessment of the impact of population on L or GDP. Population has other complex effects on w that are not captured by this simple method.

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