Article

The demographic dividend, an opportunity for the development of the economy and the welfare state

Ronald Lee, CEDA, University of California, Berkeley; Andrew Mason, University of Hawaii, co-founders of the NTA project

When a country’s working-age population grows more than its total population the outcome is the so-called demographic dividend, which represents a development opportunity to develop a welfare state protecting people from the risks associated with the labour market. It is an inestimable opportunity, bearing in mind that the demographic dividend is followed by the ageing of the population, which increases the number of elderly dependents and calls into question the sustainability of the welfare state. The experience of Europe and the developed world in general is vital for other regions of the planet that are in phases prior to the demographic transition and therefore still have the opportunity to invest in economic, education and health policies.
Key points
  • 1
       The demographic transition of populations with high fertility and mortality to low values of these two variables culminates in a process of population ageing that is usually preceded by a demographic dividend phase. The National Transfer Accounts (NTA) project makes it possible to measure this dividend by combining demographic data and projections with an imputation of national accounts by age, performed for more than 90 countries on four continents.
  • 2
       In the demographic dividend phase, the working-age population grows more than the total population, which generates very low dependency ratios. These touched bottom in Spain around the year 2010, while in the global economy this point will not be reached until 2048.
  • 3
       The demographic dividend can give rise to an economic boom phase allowing the development of the economy and a strong welfare state. This opportunity is still open to many developing countries, although it has ceased to exist for Spain and Europe in general.
  • 4
       In developed countries all that remains is the possibility of taking advantage of a future second demographic dividend, assuming that the so-called baby boomers have saved enough to increase per capita capital and hence productivity.
  • 5
       Education plays a key role in mitigating the effect of population ageing, as it makes it possible to improve the productivity of the relatively small workforce.

Classification

Tags

Subject areas

Related content

Report

Job uncertainty and income redistribution preferences

The duality between temporary and permanent contracts conditions the labour market in Spain and causes differences in job security and income. What impact does this have on people’s redistribution preferences?

Report

Disability, inequality and income redistribution

What is the economic impact of disability? This report shows that households with at least one member with disability present lower income levels.

Report

Capital income and income inequality in Spain, 1980-2020

Why does Spain present income inequality levels higher than the European average? Differences in income between age groups and the concentration of capital among the richest groups are some of the causes.

Article

Inheritance Tax and Income Tax: how much should people pay?

An experimental analysis of the preferred tax rates for different types of taxes, across a variety of taxpayer income and inheritance assumptions, and taking into account people’s perception of their own position in income distribution.

Infodata

Digital Economy and Society Index

Spain stands at the head of the countries of the EU-27 in the global computation of digital society indicators (connectivity, Internet use, etc). Portugal, however, is situated at the tail end.

You may also find interesting

A systematic review of the research on rural vulnerability

Article

A systematic review of the research on rural vulnerability


Social Inclusion

This article presents a systematic review of the literature on rural vulnerability research in order to identify the different trends related to the sources of socio-environmental vulnerability in rural Spain.

The impact of gender-based violence on sons and daughters: the role of schools according to the pupils

Article

The impact of gender-based violence on sons and daughters: the role of schools according to the pupils


Social Inclusion

Some 93% of children have heard of gender violence. Their preferential source of information is the school setting but, if faced with a situation of gender-based violence, they are unsure whether it would be the place to find help.

How do gender, experience and caseload affect judicial decisions on intimate-partner violence cases?

Article

How do gender, experience and caseload affect judicial decisions on intimate-partner violence cases?


Social Inclusion

Are male and female judges equally likely to grant restraining orders in cases of gender-based violence? According to this study, gender alone is not a determining factor but it is a key factor, together with experience and caseload.