Economic Impacts of Population Change After Malaria Eradication
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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
Demographic Scenarios - Mortality
Large mortality reduction at youngest ages
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
Demographic Scenarios - Mortality
Much smaller reductions at older ages
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
Demographic Scenarios - Fertility
Difference of 0.18 births per woman
Demographic Scenarios - Fertility
Demographic Scenarios - Age Structure
Demographic Scenarios - Age Structure
Initial impact: younger population due to more
child survival
Demographic Scenarios - Age Structure
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
After 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 ()
Model Inputs (continued)
• 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
Model Inputs (continued)
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
Before Malaria Eradication
After Malaria Eradication
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
Before Malaria Eradication
After Malaria Eradication
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
Before Malaria Eradication
After Malaria Eradication
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
Before Malaria Eradication
After Malaria Eradication
Additional Increase in Female LFP
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
Before Malaria Eradication
After Malaria Eradication
Additional Increase in Female LFP
After Malaria Eradication:
Greater assets accumulated between period of initial higher saving and period of population aging.
Model Outputs (continued)
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
After Malaria Eradication
Additional Increase in Female LFP
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.
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