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Forever young? Socio-economic implications of the demographic transition in Southern Africa

This study examines the demographic transition in Southern Africa and its implications for growth, poverty, and inequality. The study explores the potential benefits of harnessing the demographic dividend and the need for policy interventions to rebalance spending in social sectors.

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Forever young? Socio-economic implications of the demographic transition in Southern Africa

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  1. Forever young? Socio-economic implications of the demographic transition in Southern Africa Sara Troiano Social Protection Global Practice The World Bank Group stroiano@worldbank.org

  2. Aboutthisstudy • Multi-sectoralstudytonurturepolicy dialoguein Botswana, Lesotho, Namibia, South Africa, Swaziland • A team-effort • Lucilla Bruni, JameleRigolini, Sara Troiano (WB Social Protection) • Michele Gragnolati (WB Health/Population) • Amer Ahmed, Marcio Cruz (WB DevelopmentProspects) • Tom Moultrie, MorneOosthuzein (Universityof Cape Town) • David Margolis, ChaimaaYassine (SorbonneUniversity) • Servaas Van derBerg (UniversityofStellenbosch) • Hannah Santos (Johns Hopkins University)

  3. Outline • Whatis the demographicdividend (DD)? • The demographictransitionoffersopportunitiesforcountries in Southern Africa • Whatwouldthismeanforgrowth, poverty and inequality? • The labor marketiscentralfor success or failure in harnessing the demographicdividend • The need (and room) torebalancingspending in social sectorstomeetnewpriorities

  4. What is the Demographic Dividend? Total dependency ratio Time First dividend Second dividend Southern Africa • Permanent increase in capital –worker ratio and output per capita • Accumulation of human and physical capital • More disposable income to save • More production • More people in working age • More workers Importance of policies

  5. The demographictransitionoffersopportunitiesforcountries in Southern Africa

  6. The window of demographic opportunity has just opened for South Africa, and is estimated to open between 2025 and 2040 for Botswana, Lesotho, Namibia and Swaziland

  7. Under current policies, apart from Lesotho and Swaziland, the impact of the change in the population age structure on growth will be modest Real GDP per capita growth rates, 2015-50 (average annual, %)

  8. A lower child dependency will be directly translated into povertyreduction Potential contribution of demographic change on poverty headcount in 2050 (%)

  9. Inequalitywill have different patterns across countries, partly because of a differential demographic transition between low- and high-income households Change in Gini 2015-2050 (Gini points)

  10. To harness the demographic dividend good policies will be necessary GDP per capita as of 2050 (Index, 2015= 100)

  11. Given the larger cohorts of working-age population to come, Southern Africa could face severejobs shortagesin the future Projected Job Shortfall (difference between the number of jobs needed to keep unemployment stable at today’s levels and the projected number of jobs available if job creation continues at the same rate as seen in the recent past)

  12. The job problem can not be solved without addressing youthunemployment

  13. The fertility transition offers an opportunity to increase female labor force participation

  14. The young and the elderly receive significantly larger per capita benefits from the state than adult cohorts do Per capita social spending by age, as a % of GDP per capita (around 2010)

  15. Population ageing will exert downward pressure on public spending on education

  16. Opportunity to rebalance education spending towards quality of services, without increasing spending Country performance in international educational evaluations in PISA metrics by per capita GDP (PPP$), around 2011

  17. Health spending is projected to rise moderately as the population ages

  18. The organization of the health system has to adjust to a new epidemiological profile

  19. Spending in social transfers is not projected to boom (yet)

  20. Room to rebalance social protectionto improve employability of current and future workforce Social transfer generosity (= Aggregate spending as % of GDP /Age-specific dependency ratio) Social transfers promoting tertiary and vocational education, and employment (% of GDP), around 2012

  21. Thankyou!

  22. Back up slides

  23. Four groups of countries can be identified based on the opportunities that demographic change presents Total Fertility Rate

  24. The demographictransitionstartsofferingopportunitiesforcountries in Southern Africa

  25. The youthful structures of the populations in each country mean that, in aggregate, spending is directed primarily to the young

  26. Job creation and employment policies should take into account current differences by age, sex, education (ILO)

  27. HIV/AIDS-relatedmortality: high levels, butdecreasingtrends Botswana – 2015 Predicted population age structure (as of 2004) What about effects at household level? Botswana – 2015 Actual population age structure

  28. Some questionsforyou • The roleof HIV/AIDS • Employment vs. income–supportprograms? • Inequalitydimension • Migration

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