Change in demographic window in low fertility countries

Abstract

During the transition from high fertility and rapid population growth to lower fertility and slower growth, the working-age population expands relative to the dependent (younger and older) population, opening a window of opportunity for economic growth. Indeed, when fertility declines and young-age dependency ratios quickly follow suit , the ratio of working-age people to dependent people rises as the young population increases more slowly than the working-age population. This window opens as the number of younger children decreases but closes again as the number of older people rises. Most Western countries are moving into the later stage of their transition to low fertility and may not benefit from the demographic bonus as the number of older people is already very large. On the contrary, some Asian countries are entering and/or are only in the middle of the transitional period. This paper aims to illustrate the change in demographic window taking into consideration of different age demarcations to calculate total dependency ratio for Italy, France, Japan, Singapore and Hong Kong from 1950 to 2050. The results show only when the last age of the working-age population postponed from the age of 64 to 69 years can significantly lengthen the duration of demographic window. This favourable condition at least lasts until 2030 and after that total dependency ratio will gradually rise in Italy and France. The demographic window will increase by 15 years from 2007 to 2022 in Japan, by 8 years from 2026 to 2034 in Singapore and by 11 years from 2027 to 2038 in Hong Kong. However, this scenario is less probable because most people retire earlier than the age of 65 years. Young people also enter a job market later than the folks before. More discussions are made in the paper.