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Demographic Change in Asia: The Implications of Evolving Support Systems Andrew Mason East-West Center and University of Hawaii at Manoa Community 50+

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Presentation on theme: "Demographic Change in Asia: The Implications of Evolving Support Systems Andrew Mason East-West Center and University of Hawaii at Manoa Community 50+"— Presentation transcript:

1 Demographic Change in Asia: The Implications of Evolving Support Systems Andrew Mason East-West Center and University of Hawaii at Manoa Community 50+ Asia

2 Three Key Features of Asia Demography: Asia is experiencing slower population growth and rapid population aging. Economic lifecycle: High consumption but low labor income during old age. Diverse systems for meeting the material needs of the elderly. Financial systems Financial systems Public programs Public programs Familial support Familial support

3 Why are the three features important? Economic growth and standards of living Government budgets Intergenerational relationships Regional distribution of wealth (and power)

4 Bottom Line Basis for optimism: Population aging means fewer workers, but more wealth. Policy imperatives Avoid excessive reliance on transfer programs Avoid excessive reliance on transfer programs Improve financial systems Improve financial systems Promote education of consumers and policymakers Promote education of consumers and policymakers Proceed without delay! Proceed without delay!

5 Research Background International project based at the East-West Center and UC – Berkeley Research teams from 23 countries participating including US, Japan, China, Korea, Taiwan, Thailand, Philippines, Indonesia, and India. Results are preliminary. Core support from the National Institute on Aging. Details:

6 First Feature: The Demography

7 Population Decline: Labor Force China, India, Japan, and the US, Labor force decline has begun in Japan; on the horizon in China.

8 Population Aging: China, India, Japan, and the US,

9 Cause of Population Aging: US versus Japan in 2006 Life expectancy greater in Japan 82 in Japan 82 in Japan 78 in US 78 in US Fertility is much lower in Japan 1.3 births per woman in Japan 1.3 births per woman in Japan 2.1 births per woman in US 2.1 births per woman in US Immigration is much lower in Japan Negligible in Japan Negligible in Japan 1 million per year in US 1 million per year in US Most important by far!

10 Low Fertility Common in Asia Replacement fertility: Below this birth rate population cannot be sustained. Source: Population Reference Bureau 2007.

11 The Demography: Summary Rapid population aging is occurring or will soon begin in many Asian countries. Population decline is also likely. Low fertility will exacerbate these trends.

12 Second Feature: The Economic Lifecycle

13 Labor Income Consumption Consumption by the elderly greatly exceeds their labor income Source: Lee et al., Steep rise in consumption due to health care and long- term care.

14 Gap between Consumption and Labor Income at Older Ages, 13 Countries Ur Jp US Sw CR Tw Th Ch SK PhIn Indo Average gap is larger in “old” Japan, US, and Uruguay than in “young countries”. But Sweden has a more modest gaps.

15 Economic Lifecycle Summary In all countries the per person gap between consumption and labor income at older ages is large. Some tendency for the gap to be larger in older countries. Implies that the economic resources to older ages may increase faster than the population in those groups. Gap is not larger in some older countries.

16 Third Feature: The Support System (How do we fill the gap at older ages?)

17 Old-Age Support Systems Saving Public Transfers Familial Transfers Older adults rely on private pensions, housing, personal saving, etc. Older adults rely on adult children often living together. Older adults rely on public pensions, health care, and other transfer programs.

18 Old-Age Support Systems Saving Public Transfers Familial Transfers Asia (except Japan) Japan and West Latin America

19 Trend: Old-Age Support Systems Saving Public Transfers Familial Transfers Taiwan: Decline in family, increase in public and saving. Japan: Decline in family and saving; increase in public.

20 Three Scenarios for Aging Societies

21 Possibility I Rapid population aging Large lifecycle gap for the elderly Reliance on public support systems Heavy burden on future generations of taxpayers

22 Possibility II Rapid population aging Large lifecycle gap for the elderly Reliance on familial support systems Heavy burden on our adult children

23 Possibility III Rapid population aging Large lifecycle gap for the elderly Reliance on saving Increase in wealth and more rapid economic growth

24 Actual Outcome Depends on: Trends in demographic variables Extent to which the gap between consumption and labor income widens, narrows, or remains the same Shifts in the relative importance of familial support, public support, and retirement saving.

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26 A Positive Outcome If people save to support themselves in retirement, population aging leads to An increase in per capita wealth An increase in per capita wealth An increase in wages due to the greater investment An increase in wages due to the greater investment Higher standards of living. Higher standards of living.

27 Regional Shift Japan and the US have the highest per capita projected wealth, but India and China have the largest projected populations. Which countries have the greatest projected total wealth?

28 Total Wealth, National Shares, Simulated Values

29 Regional Shift in Wealth, China and India gain. US has a lower, but substantial share. Japan declines substantially.

30 Implications for Policy Emphasize asset accumulation over public and familial financial support systems. But some major problems How do we deal with rising costs of health and long-term care? How do we deal with rising costs of health and long-term care? How do we promote the development of sound and reliable financial sectors in countries where they do not yet exist? How do we promote the development of sound and reliable financial sectors in countries where they do not yet exist? How do we get people to save (and to do so wisely)? How do we get people to save (and to do so wisely)?

31 Implications for Policy To what extent should immigration policy be influenced by aging? Transfers from legal immigrants to older Americans, through Social Security, Medicare, and Medicaid are substantial. What steps should low fertility countries take to encourage marriage and childbearing?

32 Important Role for NGOs Educate consumers Encourage dialogue across generations Elevate public policy discourse

33 The National Transfer Accounts project is a collaborative effort of East-West Center, Honolulu and Center for the Economics and Demography of Aging, University of California - Berkeley Lee, Ronald, Co-Director Mason, Andrew, Co-Director Auerbach, Alan Miller, Tim Lee, Sang-Hyop Donehower, Gretchen Ebenstein, Avi Wongkaren, Turro Takayesu, Ann Boe, Carl Comelatto, Pablo Sumida, Comfort Schiff, Eric Stojanovic, Diana Langer, Ellen Chawla, Amonthep Pajaron, Marjorie Cinco

34 Japan Key Institutions: Nihon University Population Research Institute and the Statistics Bureau of Japan, Tokyo, Japan. Ogawa, Naohiro, Country Leader Matsukura, Rikiya Maliki Obayashi, Senichi Kondo, Makoto Fukui, Takehiro Ihara, Hajime Suzuki, Kosuke Akasaka, Katsuya Moriki, Yoshie Makabe, Naomi Ogawa, Maki

35 Australia Key Institution: Australia National University Jeromey Temple, Country Leader Brazil Turra, Cassio, Country Leader Lanza Queiroz, Bernardo Renteria, Elisenda Perez Chile Key Institution: United Nations Economic Commission for Latin America and the Carribean, Santiago, Chile Bravo, Jorge Mauricio Holz

36 Taiwan Key Institution: The Institute of Economics, Academia Sinica, Taipei, Taiwan. Tung, An-Chi, Country Leader Lai, Mun Sim (Nicole) Liu, Paul K.C. Andrew Mason China Key Institution: China Center for Economic Research, Beijing, China. Ling, Li, Country Leader Chen, Quilin Jiang, Yu

37 France Wolff, Francois-Charles, Country Leader Bommier, Antoine Thailand Key Institution: Economics Department, Thammasat University. Phananiramai, Mathana, Country Leader Chawla, Amonthep (Beet) Inthornon, Suntichai India Key Institution: Institute for Social and Economic Change, Bangalore Narayana, M.R., Country Leader Ladusingh, L. Mexico Key Institution: Consejo Nacional de Población Partida, Virgilio, Country Leader Mejía-Guevara, Iván

38 Indonesia Key Institution: Lembaga Demografi, University of Indonesia, Jakarta, Indonesia. Maliki, Country Leader Wiyono, Nur Hadi Nazara, Suahasil Chotib Philippines Key Institution: Philippine Institute for Development Studies. Racelis, Rachel H., Country Leader Salas, John Michael Ian S. Pajaron, Marjorie Cinco Sweden Key Institution: Institute for Future Studies, Stockholm, Sweden. Lindh, Thomas, Country Leader Johansson, Mats Forsell, Charlotte

39 Uruguay Bucheli, Marisa, Country Leader Furtado, Magdalena Rodrigo Ceni Cecilia Rodriguez South Korea An, Chong-Bum, Country Leader Chun, Young-Jun Lim, Byung-In Kim, Cheol-Hee Jeon, Seung-Hoon Gim, Eul-Sik Seok, Sang-Hun Kim, Jae-Ho

40 Austria Key Institution: Vienna Institute of Demography Fuernkranz-Prskawetz, Alexia, Country Leader Sambt, Joze Costa Rica Key Institution: CCP, Universidad de Costa Rica Rosero-Bixby, Luis, Country Leader Maria Paola Zuniga Slovenia Sambt, Joze, Country Leader Hungary Key Institution: TARKI Social Research Institute Gal, Robert Medgyesi, Marton Finland Key institutions: The Finnish Center for Pensions And the Finnish Pension Alliance Vanne, Reijo Gröhn, Jukka Vaittinen, Risto

41 United States Key Institution: Center for the Economics and Demography of Aging Lee, Ronald, Country Leader Miller, Tim Ebenstein, Avi Boe, Carl Comelatto, Pablo Donehower, Gretchen Schiff, Eric Langer, Ellen

42 Kenya Mwabu, Germano Nigeria Soyibo, Adedoyin

43 The End Support: National Institutes of Health NIA, R01-AG NIA, R37-AG025247


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