Evaluating a basic-needs strategy and population policies: the BACHUE approach

The BACHUE model, a dynamic simulation technique developed within the International Labour Organization's World Employment Program, has been applied to the Philippines. The model simulates behavior and consequences in a number of key areas: fertility, marriage, migration, savings and expenditure, and labor force participation for households and a macro-model for demand, ouput, employment, and income. The design and development of the model are discussed in detail. The model was run for a series of 13 experiments ranging from nationlization of modern sectors, increasing self-employment, movement toward labor-intensive techniques, changes in growth rates of various sectors, and a reduction in fertility by 2% over 1976-1985, an increase over the 1% assumed in the base run. Runs R-2 to R-11 all showed that a change in basic needs is associated with significant declines in fertility, largely because of increasing education and decreasing mortality. Better economic conditions in rural areas also reduced migration. R-13 which examined the effects of a family planning program of moderate size on ultimate fertility, showed that even by year 2000 the effects were small. The population is reduced 5% over the run which assumes negative income tax and government subsidies to poor families but the gain in income per adult is less than 4%. Any real improvement in income as the result of family planning will take 40-50 years to achieve. Economic incentives, on the other hand, have much faster demographic results. The models also show that rural-urban migration is responsive to policy changes. Planners are cautioned that the model is not a picture of the entire range of human behavior but is an adjunct for use in analyzing interaction between policies.     

The future of work: Meeting the global challenges of demographic change and automation

This article explores future job creation needs under conditions of demographic, economic and technological change. The authors first estimate the implications for job creation during 2020–30 of population growth, changes in labour force participation and the achievement of target unemployment rates, by age and sex. Second, they analyse the job creation needs by country income group and, lastly, examine the effects of accelerated automation. Projections indicate that shifting demographics will account for a far greater share of the estimated global need for 340 million jobs over 2020–30 than automation.     

Female employment and fertility: a study based on Chilean data

Conflicting studies bring into question the hypothesis that increased employment opportunities for women in the modern sector would reduce the population growth rate. To help clarify the situation, data from about 4000 families in central Chile, obtained from interviews in 1965, are used to test 3 hypotheses: 1) that in the traditional sector of the economy, young children do not adversely affect the mother's labor force participation; 2) that in the modern sector, child care reduces labor force participation unless there are relatives or older children to look after the young children; and 3) that young children also have a positive influence on female employment in that they increase the need for added income. This would be particularly true in the traditional sector where average household income is lower. All hypotheses were proved true by the data. Furthermore, the positive effect on the mother's employment of a larger family size proved to be true in the modern sector as well as the traditional sector. The study indicates that if a country's objective is to lower the population growth rate, a population planning program relying on higher rates of fe male employment will have to be accompanied by other socioeconomic policies intended to achieve a higher level of economic development.     

Residence and Income Inequality: Effects on Mortality Among U.S. Counties

Abstract Despite lower average incomes, greater percentages living in poverty, lower levels of health insurance, less preventive health care, and poorer health status, nonmetropolitan residents have been found to experience lower mortality than their metropolitan counterparts. Several pathways through which residence influences mortality have been proposed. The objective of this study is to examine the effects of income inequality on residential differentials in mortality. Using data from the Compressed Mortality File for counties in the coterminous United States for 1990, we estimate weighted least squares models of total mortality for 3,067 counties, and separately for metropolitan and nonmetropolitan counties. Mortality is lower in nonmetropolitan counties than in metropolitan counties, once rates are standardized for age, sex, and race. Moreover, income inequality exerts stronger effects in nonmetro counties, an effect that persists when per capita income, median household size, and racial composition are controlled. The percentage of the population that is black exerts an independent effect on mortality in both metro and non‐metro counties.     

Economic implications of Japan's aging population: a macro-economic demographic modeling approach

This paper utilizes a macroeconomic demographic model to analyze the probable impact of population aging on various public programs in Japan. Rapid fertility decline aided by mortality decline has caused the proportion of the Japanese population aged 65 and over to increase from 4.9% in 1950 to 9.0% in 1980. A population projection based on the 1975 population census assumes a recovery of fertility from a total fertility rate (TFR) of 1.9 in 1976 to 2.16 in 1980 and a gradual decline to 2.1 by 1987, while an alternative projection assumes a continuing fertility decline to a TFR of 1.65 in 2025. According to these assumptions, in 2025 18.12% to 21.29% of the total population would be aged 65 or over and 38.66% to 43.80% of the working age population would be aged 45-64. A macroeconomic neoclassical growth model with some Keynesian features was formulated to evaluate the future impact of population aging on social security programs. Population changes are transmitted to economic variables in the model through the supply of labor, level of savings, public health care plans, and old-age pension schemes. The simulation experiments included the 2 population projections and 2 alternative production functions, 1 with the quality of labor incorporated and 1 without. The results indicated that, regardless of the population projection and production function used, the growth of the economy is likely to slow to 1 or 0% in the beginning of the next century due to decreased growth of the labor force and a change in its quality due to age-compositional variations. Public health insurance schemes and pension plans will require increasing financial resources as a result of accelerated population aging; depending on the choice of benefit levels, the proportion of national income allocated to them is expected to range from 14%-40% in the year 2010. Per capita gross national product will continue to grow despite decreased economic growth, but savings might be adversely affected if the provision of social insurance benefits continued to increase monotonically. Possible palliative measures would be to change present employment practices or to upgrade the quality of the labor force through vocational training programs for older workers.     

Tracing out the effects of demographic changes on the income distribution

During the 1980s and 1990s fertility decisions varied significantly and not uniformly along the income distribution in Argentina. In this paper we study the effects of these demographic changes on income poverty and inequality by applying microeconometric decomposition techniques. In particular, we simulate the equivalized household income distribution that would emerge if individuals observed in a given base year had taken fertility decisions as they did in another different year. The results suggest that these demographic factors have contributed considerably to the changes in poverty and inequality experienced by Argentina since the 1980s.     

Growth versus Distribution: Does the Pattern of Growth Matter?

Despite the fashion for pro‐poor growth, there remains no consensus as to its meaning. This article proposes three possible definitions, and examines the pattern of growth over time and in different world regions. The growth of the poor's income can be broken down into a growth effect and a distribution effect. In 143 growth episodes, it is found that the growth effect dominates. However, in over a quarter of cases changes in distribution played a stronger role than overall growth in increasing income for the poor. Econometric analysis of growth regressions for each population quintile supports the idea that openness benefits everyone, but indicates a robust perverse relationship with governance. There is also evidence of a trade‐off between growth and distribution, suggesting that attention to distribution will be better for the poor than going for growth.     

The effects of the Chilean divorce law on women’s first birth decisions

In 2004 a new law in Chile allowed couples to divorce for the first time. The law also established compensation in case of divorce where one spouse sacrifices professional development or advancement for the good of the household. Using birth histories constructed from the Chilean Social Security Survey (Encuesta de Prevision Social–EPS) Panel 2002–2009, we investigate the effect of the divorce law on a woman’s decision of when to have a first child. We find that the divorce law increases the hazard rate of having the first child by 61 % for more educated women, controlling for socioeconomic characteristics, length of marriage and the negative trend in fertility rates observed in Chile since the mid-1960s. We also find that a given percentage increase in a woman’s potential income will increase the hazard rate by a greater percentage increase after the passage of the law.     

Natural fertility in the Philippines

The hypothesis that modernization trends in the Philippines led to an increase in fecundity and natural fertility between 1953-1972 was tested, using data from the 1973 National Demographic Survey. More specifically, it was hypothesized that increases in education, income levels, urbanization, female labor force participation, and other factors exerted a positive influence on the population's health and nutritional status and increased the risk of pregnancy by diminishing the strength of sexual taboos and by decreasing the incidence of breastfeeding. These changes, in turn, had a positive impact on natural fertility. Natural fertility was defined as marital fertility in the absence of specific efforts to control fertility. The use of natural fertility instead of fecundity allowed for the influence of behavioral patterns, such as breastfeeding and sexual taboos, on fertility. Period analysis of age specific marital fertility rates for each 5 year period between 1953-72 and cohort analysis of age specific marital fertility rates for the birth cohorts, aged 55-59, 50-54, 45-49, 40-44, and 35-39 in 1973 were undertaken. The effect of fertility control was determined by using an index derived from an equation provided by Coale and Trussell. Findings of both the period and cohort analysis supported the hypothesis. Period analysis revealed that natural fertility increased between 1953-57 and 1969-72 by 10% and that the greatest increase occurred during the 1950s when Philippine society experienced major modernization changes. The increases in natural fertility were accompanied by corresponding increases in fertility regulation in each time period. These trends tended to cancel each other out and resulted in a relatively stable total marital fertility rate throughout the time period. Cohort analysis revealed that only the total marital fertility rate of the youngest cohort was influenced by fertility regulation. The level of natural fertility for all cohorts as a group increased by about 7.5% between 1953-72. The major increase occurred during the post war years. All of these occurred during the time period when the Philippines underwent major socioeconomic changes. Data on changes in socioeconomic indicators during the time period under observation were presented. For example, between 1948-70, the literacy rate increased from 62.8%-84.6% for males and from 56.9%-82.2% for females. The infant mortality rate declined from 125.5-67.3 between 1948-70, and breastfeeding declined from 64.2%-26.5% between 1958-74. The increase in the natural fertility level tapered off during the last few years, and in the future the impact of fertility control on the fertility rate should become stronger.     

Demographic and employment shifts: implications for benefits and economic security

This Issue Brief examines factors affecting the population's age distribution and composition, such as mortality rates, fertility rates, and immigration. In addition, it examines factors affecting labor force composition, such as immigration, increased labor force participation of women, and retirement trends, and discusses the potential impact of these changes on publicly financed programs: Medicare, Medicaid, Social Security, and federal employee retirement systems. The discussion also highlights the implications of these population and labor force changes on employers, employees, and retirees. The elderly population--now 31.8 million, representing 12.6 percent of the population--is projected to experience tremendous growth between 2010 and 2030, when the baby boom generation reaches age 65, rising from 39.7 million, or 13.3 percent of the population, to 69.8 million, or 20.2 percent of the population. Growth in the elderly population has implications for retirement and health care systems. Population projections suggest that the traditionally pyramid-shaped work force, with a proportionately greater number of younger workers than older workers, will be replaced with a more even age distribution. Consequently, significant and continued modifications to benefit packages, such as changes in compensation structures in which earnings automatically rise with age, are likely to occur. Women's labor force participation began to accelerate in the mid-1950s, rising 75 percent among women aged 25-44 in 1991, although there is some indication that this growth may be flattening. With women comprising a greater part of the labor force, employers will be encouraged to develop and implement programs to better accommodate their needs. Increased life expectancy, a decreased percentage of entry level workers, changes in Social Security's normal retirement age from 65 to 67, and employer plans to raise the normal age of retirement or provide incentives to delay retirement, could raise the average age of retirement. However, other factors, such as poor health, other sources of retirement income, and individual preferences for retirement, could still dominate the retirement decision. The combination of increased average life expectancy guaranteeing more years of retirement to finance and rising dependency ratios increases the future cost of Social Security financing. Medicare financing is also an important policy issue because the program is projected to experience financial difficulties in the short term, resulting from explosive health care costs. In addition, Medicaid expenditures are consuming increasing amount of shrinking state budget resources--a large portion of which is used to finance nursing home care for a growing elderly population.     

Scamming the Poor

Abstract

Because of the difficulty in securing traditional forms of credit, the poor are often driven into the fringe economy for check cashing, bill paying and short-term loans. These services involve high user fees and exorbitant interest rates that rival or even exceed those for illegal loan sharking. Fringe lending businesses function as a legal and virtually unregulated form of predatory loan-sharking. They neither offer nor promote savings-based financial products that build assets and increase household wealth. The predictable outcome is the depletion of the income and assets of low-income families and communities. Because many poor clients are vulnerable to fringe market lenders, social workers need to understand this market to better assist the poor in finding and developing alternative forms of borrowing. This article will explore the rapidly growing fringe economy and examine strategies to help curb the drain of income and assets from low-income communities.     

Demographic Changes and Economic Activityin Greece

This paper investigates the linkages among demographic changes (fertility choice, marriage decision and mortality), real wages and real output in Greece over the period 1960–1998. The results show that in the long run a decrease in infant mortality rates, taking into consideration economic performance and the labor market, causes a reduction in fertility rates. In addition, the results suggest that an increase in real wages decreases nuptiality and fertility. Employing vector error-correction models and impulse response functions, the empirical results support the endogeneity of fertility choice to infant mortality, the labor market and the growth process.     

Small-scale farming in semi-arid areas: Livelihood dynamics between 1997 and 2010 in Laikipia,Kenya

The rural population of semi-arid lands in Kenya face multiple challenges that result from population growth, poor markets, land use and climatic changes. In particular, subsistence oriented farmers face various risks and opportunities in their attempt to secure their livelihoods. This paper presents an analysis on how livelihood assets and strategies of smallholders in Laikipia County, Kenya, have changed within the last decade and discusses the implications for development interventions. The analysis is based on bi-temporal data from 170 semi-structured household interviews in 1997 and a follow-up survey of 30 households conducted in 2010. Well-being indicators were developed and livelihood portfolios compared. The results show a striking persistence in low asset endowment for the majority of smallholders from an aggregated perspective, whereas transitions into and out of better livelihood conditions become evident from a household perspective. The investment in, and accumulation of, conventional buffer or productive assets, such as grain stocks, livestock or land, does not shield households from adverse shocks and stresses as smallholders were shown to easily slip back into poverty. Household portfolios display particular constraints for smallholders in expanding natural resource related activities and a substantial decrease in livestock numbers. While off-farm activities could possibly increase well-being, the prevailing low income levels and high insecurity for the majority who are engaged in off-farm employment, limits the ability to increase livelihood assets in the area.     

Social capital and household income distributions in the United States: 1980, 1990

This paper asked if changes in social capital influence the level and disparity of household income in the United States. Social capital is defined in this paper as one's sympathy (antipathy) for others and one's idealized self. Changes in social capital are expected to produce the following economic consequences. First, increases in social capital are expected to alter the terms of trade and to increase the likelihood of trades between friends and family. Second, increases in social capital are expected to increase an economic agent's concerns for the external consequences of his or her choices, internalizing what otherwise would be considered externalities. Third, increases in social capital between firms are expected to increase the likelihood that they will act in their collective interest. Fourth, increases in social capital are expected to increase the opportunities for specialization and the likelihood of trade. Finally, increases in social capital are expected to raise the average level of income and reduce the disparity of income.This paper empirically tested the relationship between changes in social capital indicator variables and changes in the average and coefficient of variation (CVs) of household income. State CVs and averages of household income were calculated for all 50 states and for different races/ethnic groups using the U.S. Census data for 1980 and 1990. Social capital indicator variables selected to measure changes in social capital included measures of family integrity including the percentages of households headed by a single female with children; educational achievement variables including high school graduation rates; crime rate variables including litigation rates; and labor force participation rates. The social capital indicator variables appeared to be significantly correlated with each other. However, in 1980, the percentages of households headed by a single female with children was not significantly related to the birth rates of single teens. By 1990, however, a strong correlation was found between the percentages of households headed by a single female with children and the birth rate of single teens.Income inequality among U.S. households measured using CVs increased between 1980 and 1990 in all 50 states. The largest increase in CVs was among white households. The smallest increase in CVs was among Asian households. The states with the largest increase in the ratio of 1990 and 1980 CVs were Arizona, Wyoming, Maine, Vermont, and Texas. Half of the states reported decreases in real household income between 1980 and 1990. Those states with the largest percentage decrease in real income were Wyoming, Alaska, Montana, Louisiana, and West Virginia. The largest percentage increase in real income was reported by Connecticut, New Jersey, Rhode Island, and Massachusetts.State CVs and averages of household income were regressed on four factors or subsets of social capital indicator variables. The four factors used to predict CVs and averages of household income were generally statistically significant. The findings of this report support the conclusion that changes in social capital have a significant effect on the disparity and level of household income.     

THE EFFECT OF HOUSE PRICE ON FERTILITY: EVIDENCE FROM HONG KONG

This article extends a standard Beckerian model of fertility behavior to formulate the effect of house price (HP) on fertility. The simple model predicts a negative effect of HP on the number of children for a representative household not only through the income effect but also through the compensated substitution effect. The prediction is confirmed by a cointegration analysis applied to the annual data at the aggregate level covering the period from 1971 to 2005 in Hong Kong. It is found that a 1% increase in HP is significantly related to a 0.45% decrease in total fertility rates (TFRs), which is robust in sensitivity tests with an alternative model specification and alternative measures of TFRs. This implies that high HP inflation can account for about 65% of the fertility decrease in Hong Kong in the past four decades. (JEL J13, J11, C32)     

Living Arrangements, Employment Status, and the Economic Well-Being of Mothers: Evidence from Brazil, Chile, and the U.S

Using data from Brazil, Chile, and the U.S., we estimate country specific models of household income that characterize mothers according to their marital status, living arrangement, and employment status. We assess the predicted economic well-being of each type of mother relative to a benchmark of married mothers in the same country, and at various points in the income distribution. We find dramatic cross-country differences in the distribution of mothers across categories, but few differences in each type's relative economic status. In all three countries and at all points in the income distribution, mothers who are the only adults in their households have the lowest levels of predicted income, while married mothers—followed closely by cohabitors—have the highest levels.     

Measuring the impact of price changes on poverty

This paper develops a methodology to measure the impact of price changes on poverty measured by an entire class of additive separable poverty measures. This impact is captured by means of the price elasticity of poverty. The total effect of changes in price on poverty is explained in terms of two components, income and distribution effects. The income effect measures the change in poverty when all prices increase uniformly, whereas the distribution effect captures the change in poverty because of changes in relative prices. Using this decomposition, the paper derives an empirically operational index, which reveals whether the price changes have been pro-poor or anti-poor. The paper also derives a new price index for the poor. While this index can be computed for any poverty measures, our empirical analysis applied to Brazil is based on three poverty measures, the head-count ratio, the poverty gap ratio and the severity of poverty. The empirical analysis shows that price changes in Brazil during the 1999–2006 periods have been anti-poor. Nevertheless, during the last 2 to 3 years, the price changes have affected the poor less adversely than the non-poor.     

Do the rich save more in Latin America?

This paper reports evidence that the savings rate of the rich is higher than that of the poor in Brazil, Chile, Costa Rica, Ecuador, Honduras, Mexico, Panama, Paraguay and Peru. On average, the difference between the fifth and fourth income quintile groups is 7 percentage points. No differences between income groups are found in Uruguay and the results for Argentina and Colombia are not robust to estimation alternatives. The key methodological step is to construct a measure of lifetime income. Current income is not a good proxy since it is affected by phases of the life cycle and transitory shocks. We implement a two-stage procedure based on the education level of the household head and the education level of his/her partner. Several robustness exercises are reported for different age groups, inclusion/exclusion of outliers and for a wealth index based on homeownership, home appliances and other household owned assets.     

Einkommen, Gesundheit und Mortalität in Deutschland, Grossbritannien und den USA

The paper examines the effect of income on mortality with respect to different health statuses and institutional characteristics of the health care system in the USA, Great Britain and West Germany. It is hypothesized that the nature of the theoretical contribution of income in explaining mortality risks changes on whether good or poor health is considered. Taking into account that the health care systems of the countries in question vary by their degree of household out-of-pocket expenditure, we expect an association between income and mortality that differs by country. The analysis is based on the German Socio-economic Panel (GSOEP), the British Household Panel Study (BHPS), and the Panel Study of Income Dynamics (PSID). The effect of income on mortality is found to be weakest when medical services are sought in the presence of poor health within the framework of a national health insurance that renders free primary health care (Great Britain, Germany). The effect is strongest when the provision of primary health care depends strongly on private expenditures (USA).     

Socio-economic fertility theories and their relevance to population policy

A theory of fertility is necessary to assess the justification for family planning and to understand the effectiveness of the programs. 3 possibilities for uses of a theory of fertility are discussed: 1) assessment of population projections, 2) indications of what can be expected from family planning, and 3) assessment of population control projects. Birthrates are high, but fertility rates in developing countries are between 40% and 60% below the maximum possible. Social and cultural elements and economic incentives and constraints play a role in keeping the birthrates high. Economic development is frequently accompanied by a drop in fertility, but economic development implies other simultaneous changes which influence fertility rates. Gary Becker's fertility theory holds that with higher income people would purchase more children, the people behaving as they would in purchasing consumer durables. However, higher income groups frequently have fewer children. Becker says that higher income families want high-quality children who are more expensive. A pure economic theory does not explain all of the fertility variations; it is necessary to take account of the socioeconomic processes that result from economic development. Family planning policies that influence people's motivations should be developed.