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Ageing paranoia: its fictional basis and all too real costs Jane OSullivan Fenner Conference 2013 Population, Resources and Climate Change. AAS 10-11 October 2013

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Ageing is the main excuse for maintaining population growth Population growth is a policy variable (a choice). A significant shift in policy in the past 20 years: High fertility nations have reduced family planning. Low fertility nations have resisted stabilisation. A consequent resurgence in global population growth. Global population wont peak unless nations embrace stabilisation or descent.

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2012 UN Population Projections

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High 15.8 16.6 billion Medium 10.1 10.9 billion Low 6.1 6.8 billion 2012 UN Population Projections

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High 15.8 16.6 billion Medium 10.1 10.9 billion Low 6.1 6.8 billion 2012 UN Population Projections Constant Fertility 28.6 billion

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High 15.8 16.6 billion Medium 10.1 10.9 billion Low 6.1 6.8 billion Projections are blind to carrying capacity Resource Constraints? Joel Cohen How Many People can the Earth Support: 7-12 billion is the zone If most people would prefer a decline in birth rates to a rise in death rates, then they should take actions to support a decline in fertility while time remains to realize that choice.

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Annual Increment of Population Medium Projection Constant Fertility Projection Recent estimates from Population Reference Bureau

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Press briefing upon publication of UNs World Population Prospects: The 2012 Revision Most of this increase is due to changes in our estimates of current fertility for several high-fertility countries Our medium-variant projection continues to assume a rapid fall in future levels of fertility for these countries. We continue to calibrate the pace of future fertility decline using the historical experience of countries that underwent a major reduction of fertility levels after 1950, in an era of modern contraception. The mediumvariant projection is thus an expression of what should be possible [it] could require additional substantial efforts to make it possible. John Wilmoth, Head of Population Division, UNDESA

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Fertility reduction in response to population-focused family planning programs Typical fertility reduction of 2-3 units per decade in the first two decades. (UN projection assumes 1 unit per decade.)

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UN Survey of Population Policy 2011

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International support for family planning has fallen Allocation of international funding for Population Assistance from S.W. Sinding 2009. Population Poverty and Economic Development. Phil. Trans. R. Soc. B 2009 364, 3023-3030.

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Fertility rebound in developed countries from: Myrskyla et al. 2009 Advances in development reverse fertility declines

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Ageing is an inevitability of the demographic transition from: Productivity Commission 2005: Economic Implications of an Ageing Australia

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Population growth only partly delays ageing % over 65 Aged dependency: >65 / 15-65 Dependency Ratio: ( 65) / 15-65 Real dependency ratio?: ( 70) / 20-70 TFR=2, NOM=0 TFR=2, NOM=220,000

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The 3 Ps: GDP = Population x Participation x Productivity Assumptions: Natural resources dont count. Diluting, degrading and depleting them will not affect per capita wealth, because they are not in the model. Job seekers create jobs. The size of the economy will be proportional to the number of working age people. The 3 factors are independent. Population growth will not reduce participation (competition for jobs) or productivity (competition for resources and markets). Growth rate costs nothing. The infrastructure, equipment and professional personnel that added people need will be created without penalty.

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Self-affirming factorisation: The Kaya formula for global emissions is another example: Emissions = Population x GDP/person x Energy Intensity of $ x Carbon intensity of energy

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The first P: Population - but wealth is a per capita thing! Did population growth help Australia avoid the GFC? Negative per capita growth for >4 quarters made deeper by population growth. Population growth delinks GDP from wealth.

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So, does population growth increase participation or productivity? The ageing argument: keep the proportion of working age people high. Productivity Commission 2011 Plausible increases in fertility and net migration would have little impact on ageing trends. any effect would be short lived. This is because immigrants themselves age to maintain the age structure of 2003-04 in 2044-45, annual migration during that period would need to be above 3 per cent of Australias population, leading to a population of over 100 million by the middle of this century Sustainable Australia Report 2013: every 50,000 new migrants have roughly half the impact on ageing trends than the previous 50,000.

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Models show ageing will reduce participation The unemployed are unlikely to take up the slack because: Unemployed people and people outside the labour force are generally different from the employed in skill, motivation and aptitude. Productivity Commission (2005) Economic Implications of an ageing Australia

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The real world experiment Is the proportion of people employed governed by the supply of people of working age, or by the supply of work? There is no correlation between ageing and proportion of people employed.

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The real world experiment Is the proportion of people employed governed by the supply of people of working age, or by the supply of work? The differences are even smaller when part-time work is considered.

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The real world experiment Does population growth increase productivity? There is no trend among nations, nor among municipalities (USA).

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Are we measuring productivity decline as GDP growth? Density diseconomies: Infrastructure Australia (2011) The cost of providing new infrastructure is rising faster than the rate of inflation in part, because costlier construction options, such as tunnelling for new roads, now need to be adopted in the large cities. Unremunerated costs of labour: Grattan Institute (2013): on the perimeters of Brisbane, Sydney, Melbourne and Perth, more than 90 per cent of jobs are at least an hour away on public transport. Residential housing debt tripled since 2003.

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What about wealth distribution? Does a growing workforce create more opportunities for the needy? The most youthful nations have the poorest poor. Because immigration makes labour more abundant relative to the existing stock of capital and land, it tends to increase the returns to the latter at the expense of labour. Productivity Commission 2011

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What about wealth distribution? The GINI coefficient measures inequality of income: Greater inequality is associated with worse physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage pregnancies, and child well-being (Wilkinson & Pickett, The Spirit Level 2009)

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What about Pensions and Health Care Costs? If the labour market is oversupplied, pensions only replace unemployment and disability benefits. Raising the pension age by 3-5 years negates change in working age proportion. but is not needed if labour supply holds up. The worst trends for retirement funding are housing inflation and casualised work. a generational time-bomb imposed by population growth.

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Can population growth offset Health Care Costs? Most increase in health costs is due to changing treatment technologies and expectations. Cost is related more to proximity to death than to age. Proportion of adults with