Population momentum dividend aging

1. Understanding Age-Sex Structure of
Population (Part II)
Dr T R Dilip,
International Institute for Population Sciences
Course C1: Introduction to Demography and History of Population
MBD/MA/MSc/MPS
4th October 2021

3. Population stabilization
• Population stabilization is a stage when the size of the
population remains unchanged (zero population
growth)
• Population stabilization occurs when births plus in-
migration equals deaths plus out-migration.
• There is often a gap of a few decades between
achieving replacement level fertility i.e. TFR of 2.1 (two
children per couple) and population stabilization.
• India’s National Population Policy 2000, had set the
goal of achieving the larger goal of population
stabilization by 2045.

4. Population momentum
• Population Momentum refers to the tendency of the
population to continue growing beyond the time when
the replacement fertility is achieved (TFR=2.1 &
NRR=1).
• This is a function of age structure of the population
due to high levels of fertility in the past.
• Has an important impact on population trends,
including for trajectories of growth or decline.
• In countries where fertility has been below the
replacement level for several decades momentum will
have a negative effect on future growth.

5. India and global population 15-49 years

7. Source: United Nations . The impact of population momentum on future population growth. Population Facts.
Oct 2017. https://population.un.org/wpp/Publications/Files/PopFacts_2017-4_Population-Momentum.pdf
2015-2050- 65% of
projected global
population growth
due to population
momentum
impact of population
momentum
diminishes over time
flattening of the
momentum variant
after around
43 percent of the
projected growth
between 2015-2100
Population momentum impact on global population growth

8. Source: Andreev, K., Kantorová, V. and Bongaarts, J., 2013. Demographic components of future population growth. Population Division
Technical Paper, (2013/3). https://www.un.org/en/development/desa/population/publications/pdf/technical/TP2013-3.pdf

9. Reducing the impact of population
momentum on population growth
• A delay in the onset of child bearing and an increase
in the interval between births
• This reduces the number of births occurring in
future years, independent of the number of births
women have over their lifetimes.
• Delays in early marriage and early first birth have a
range of beneficial effects on the welfare of girls and
women independent of the demographic effects

10. What is the demographic dividend
10
• What happens as a result of a sustained decline in
fertility and the subsequent decrease of the size and
weight of the young population and increase in the
working age population. So the dependency ratio
decrease.
• Provides an opportunity for smarter economic and social
investments (human capital) and increased countries'
output and the possibility for long-term development.
• The demographic dividend is not given as such. It is an
windows of opportunity. Requires the right policies.

12. Share of dependent and working age groups in India,
1971-2011

14. Demographic dividend & labor supply
• The generations of children born during periods of high fertility
finally leave the dependent years and can become workers (but
good policies, preferably in place before the demographic
transition, are required to educate and train them so they are
not just unemployed).
• Women now have fewer children than before and are released
to take jobs outside of the home; also they tend to be better
educated than older cohorts and are therefore more
productive in the labor force.
• This assumes wise policies by government to create more jobs
and seize upon the “dividends” of the changed age
distribution—if they fail to do this, countries may struggle with
the social unrest of millions of unemployed citizens.

15. Demographic dividend & personal and
national savings
• Working-age adults tend to earn more and can save more
money than the very young. The shift away from a very young
age distribution favors greater personal and national savings.
• The ability to save money increases further when individuals
born during periods of high fertility move into their 40s, when
their own children are mainly on their own and require less
support.
• Personal savings grow and serve as a partial resource for
industrial investments that fuel economic growth.

16. Demographic dividend & Human Capital
• Parent are under less strain to provide for many children. In
surveys both men and women often cite economic pressures
as their reason for using contraception.
• Family income can be focused more upon better food for
infants and children , leading to better nutritional & health
status.
• Having fewer children enhances the health of women. Their
participation in the labor force, in turn, enhances their social
status and personal independence. They tend to have more
energy to contribute both to their families and to the society.
• Incomes can go toward prolonged education for girls, and for
teenagers of both sexes to improve their life prospects.

17. Taking advantage of demographic dividend
• Achieving a demographic dividend requires that each country
understand the size and distribution of its population, its current and
projected age structure, and the pace of population growth.
• National needs must be matched to a sequence of short- and
medium-term investments that assure the rights of all young people
to plan their lives, be free of violence and trauma, be assured of
essential freedoms and reproductive rights, and have access to
quality education and mentoring.
• Realizing a demographic dividend requires multiple investments. The
most essential are building the capabilities of people and ensuring
their rights and freedoms to achieve their potential. Young people
need the chance to gain the education and experience to succeed in
a competitive global workplace, which demands more skills,
education and technical expertise than ever before.

18. UNFPA on harnessing demographic dividend: Adolescent Girls

19. Demographic dividend in India
• Window of opportunity already opened in early 2000s
• Will peak by early 2030’s
• Projections indicate it will be phasing out by 2051
• A consequence of India’s staggered fertility transition is that
the window of demographic opportunity would be open in
different regions during different time periods
• Therefore, India will not draw a high dividend at any time but
will draw a moderate dividend over along time
• The extent to which India can capitalize on this depends on
how well the workers can be employed.
• quality of labour force and capacity of the economy to harvest
the potential dividend into actual benefit ????

20. Population Aging
• Outcome of 3 key demographic process
– declining fertility
– reduction in mortality
– increasing survival at older ages
• An inevitable and irreversible demographic
reality that is associated with welcome
improvements in health and medical care and
economic and social development (“human
success stories”).

22. Population Aging

23. Population Aging in India

24. Population Aged 80+

25. Financing old age
Consumption needs of older persons is financed
through
1. public programmes providing pensions, health
care and other forms of social protection;
2. transfers from family members or other private
sources;
3. their own assets and accumulated wealth; and
4. their labour income.

26. Patterns in financing old age
• Europe and Latin America rely heavily on public transfers
– will increase the fiscal pressure on public transfer systems,
especially if current patterns of taxation and benefits remain
unchanged.
• Own assets and accumulated wealth are the primary
source of support for older persons in Southern Asia and
South-Eastern Asia.
– individuals and families are under pressure to find means of
financing consumption at older ages.
• labour-force participation declines at older ages, labour
income is an important third or fourth source that funds
between 15 and 25 per cent of consumption at older ages
in all regions except Europe

27. Maximizing the benefits and manage the risks
associated with population ageing (UN)
• governments should support continuing and lifelong education and
health care for all;
• encourage savings behaviour and healthy lifestyles throughout the
life course;
• promote employment among women, older persons and others
traditionally excluded from the formal labour force, including
through a gradual increase in the official retirement age;
• Support family-friendly policies to facilitate work-life balance and
increased gender equality in both public and private life
• establishing social protection programmes that can be sustained
over the long term to prevent poverty, reduce inequality and
promote social inclusion among older persons.

28. Ageing in India
• Over time, the large bulge of population will move from working
ages to old ages raising old age dependency.
• This would matter at the macro-level, but also at the micro or
household level.
• Traditionally, supporting elderly parents has been the responsibility
of working adults but low fertility means small families who would
find it difficult to support elderly parents.
• Need to account for contribution of elderly to their households
• This would then call for developing mechanism to provide old age
support. At the national level, this matter does not seem urgent
now but some states, the leaders in fertility transition, would face
this issue soon.

29. Resources used
• Andreev, K., Kantorová, V. and Bongaarts, J., 2013. Demographic components of future population
growth. Population Division Technical Paper, (2013/3).
https://www.un.org/en/development/desa/population/publications/pdf/technical/TP2013-3.pdf
• Kulkarni P. M. Demographic Transition in India:
https://censusindia.gov.in/digitallibrary/Demographic-Transition-in-India.pdf
• Shryock, H.S. and Jacob S. Siegal. "The methods and materials of Demography." Chapter 7 and 8.
1978. Academic Press, New York
• James, K.S., 2011. India’s demographic change: opportunities and challenges. Science, 333(6042),
pp.576-580. https://www.researchgate.net/profile/K-
James/publication/51530364_India's_Demographic_Change_Opportunities_and_Challenges/links/
0deec5348cac71d93d000000/Indias-Demographic-Change-Opportunities-and-Challenges.pdf
• United Nations, Department of Economic and Social Affairs, Population Division (2020). World
Population Ageing 2019 (ST/ESA/SER.A/444).
https://www.un.org/en/development/desa/population/publications/pdf/ageing/WorldPopulationA
geing2019-Report.pdf and https://population.un.org/wpp/Graphs/Probabilistic/POP/60plus/356
• United Nations Population Fund (UNFPA) , Caring for Our Elders: Early Responses India Ageing
Report – 2017. https://india.unfpa.org/sites/default/files/pub-pdf/India%20Ageing%20Report%20-
%202017%20%28Final%20Version%29.pdf

30. Thank You