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The Population Puzzle

The Population Puzzle Australia’s ageing population and the Economic Consequences 27 May 2014 Paula Lorandi, James

Australia’s ageing population and the

Economic Consequences

27 May 2014

Paula Lorandi, James Fry, Tanvi Srinivasan

the Economic Consequences 27 May 2014 Paula Lorandi, James Fry, Tanvi Srinivasan ENVM3526 Systems Thinking System
the Economic Consequences 27 May 2014 Paula Lorandi, James Fry, Tanvi Srinivasan ENVM3526 Systems Thinking System

ENVM3526 Systems Thinking System Dynamics

Outline

I
I

The Problem

II
II

Causal Loop Diagrams (CLD) and System Archetypes

III
III

The System Dynamic Model

IV
IV

Interventions

V
V

Challenges and Lessons Learned

The Problem: Increasing Demand

The Problem: Increasing Demand
The Problem: Increasing Demand

The Problem: Decreasing Supply

The Problem: Decreasing Supply

CLD: The Population and Economy

CLD: The Population and Economy Assumptions and Simplifications • Only 16 to 64 year olds migrating

Assumptions and Simplifications

Only 16 to 64 year olds migrating into Australia

Fixed unemployment, underemployment and early retirement rates

Does not take into account postponing work for further education

Deaths only in aged dependents/retirees (65+)

System Archetype: Success to the Successful

System Archetype: Success to the Successful

System Archetype: Shifting the Burden

Baby Bonus introduced Replacement level
Baby Bonus
introduced
Replacement level

System Archetype: Limit to Growth

System Archetype: Limit to Growth

System Dynamic Model

System Dynamic Model

Intervention: Net Overseas Migration

Current (C) Scenario Net Migration: 245,000 per year

Current (C) Scenario Net Migration: 245,000 per year Proposed (P) Scenario Net Migration: 400,000 per year

Proposed (P) Scenario Net Migration: 400,000 per year

year Proposed (P) Scenario Net Migration: 400,000 per year Effect of Increasing Net Overseas Migration  

Effect of Increasing Net Overseas Migration

 

Population (C)

Population Change (P)

Labour Force/Participation (C)

Labour Force Increase/Participation (P)

2012

22,710,000

0

11,913,000

52,46%

0

52.46%

2034

27,839,609

9,715,033

11,983,488

43.04%

5,935,608

47.71%

2056

34,127,867

21,624,443

12,903,463

37.81%

11,158,561

43.16%

2078

41,836,483

36,223,885

14,649,003

35.01%

16,643,618

40.09%

2100

51,286,277

54,120,970

17,203,170

33.54%

22,866,690

38.01%

Intervention: Underemployment, Unemployment and Early Retirement

Current (C) Scenario

Underemployment (7.3%), Unemployment

(5.8%) and Early Retirement (14%)

(7.3%), Unemployment (5.8%) and Early Retirement (14%) Proposed (P) Scenario Underemployment (3.65%), Unemployment

Proposed (P) Scenario

Underemployment (3.65%), Unemployment

(2.9%) and Early Retirement (7%)

(3.65%), Unemployment (2.9%) and Early Retirement (7%) Effect of Decreasing Underemployment, Unemployment and Early

Effect of Decreasing Underemployment, Unemployment and Early Retirement rates

 

Population (C)

Population Change (P)

Labour Force/Participation (C)

Labour Force Increase/Participation (P)

2012

22,710,000

0

11,913,000

52,46%

1,643,500

59.69%

2034

27,839,609

0

11,983,488

43.04%

1,653,225

48.98%

2056

34,127,867

0

12,903,463

37.81%

1,780,143

43.03%

2078

41,836,483

0

14,649,003

35.01%

2,020,955

39.85%

2100

51,286,277

0

17,203,170

33.54%

2,373,324

38.17%

Intervention: Retirement Age 1

Current (C) Scenario Retirement Age: 65 years

Age 1 Current (C) Scenario Retirement Age: 65 years Effect of Increasing Retirement Age Proposed (P)

Effect of Increasing Retirement Age

Proposed (P) Scenario Retirement Age: 70 years

Age Proposed (P) Scenario Retirement Age: 70 years   Population (C) Population Change (P) Labour
 

Population (C)

Population Change (P)

Labour Force/Participation (C)

Labour Force Increase/Participation (P)

2012

22,710,000

0

11,913,000

52,46%

0

52.46%

2034

27,839,609

0

11,983,488

43.04%

394,575

44.46%

2056

34,127,867

0

12,903,463

37.81%

674,797

39.79%

2078

41,836,483

0

14,649,003

35.01%

906,613

37.18%

2100

51,286,277

0

17,203,170

33.54%

1,133,102

35.75%

Intervention: Retirement Age 2

Current (C) Scenario Retirement Age: 65 years

Age 2 Current (C) Scenario Retirement Age: 65 years Effect of Increasing Retirement Age Proposed (P)

Effect of Increasing Retirement Age

Proposed (P) Scenario Retirement Age: 75 years

Age Proposed (P) Scenario Retirement Age: 75 years   Population (C) Population Change (P) Labour
 

Population (C)

Population Change (P)

Labour Force/Participation (C)

Labour Force Increase/Participation (P)

2012

22,710,000

0

11,913,000

52,46%

0

52.46%

2034

27,839,609

0

11,983,488

43.04%

734,384

45.68%

2056

34,127,867

0

12,903,463

37.81%

1,272,712

41.54%

2078

41,836,483

0

14,649,003

35.01%

1,727,639

39.14%

2100

51,286,277

0

17,203,170

33.54%

2,175,202

37.78%

Intervention: Birth Rate 1

Current (C) Scenario Birth Rate: 13.6 births/1000 people/year

(C) Scenario Birth Rate: 13.6 births/1000 people/year Effect of Increasing Birth Rate Proposed (P) Scenario Birth

Effect of Increasing Birth Rate

Proposed (P) Scenario Birth Rate: 15 births/1000 people/year

(P) Scenario Birth Rate: 15 births/1000 people/year   Population (C) Population Change (P) Labour
 

Population (C)

Population Change (P)

Labour Force/Participation (C)

Labour Force Increase/Participation (P)

2012

22,710,000

0

11,913,000

52,46%

0

52.46%

2034

27,839,609

862,049

11,983,488

43.04%

267,475

42.68%

2056

34,127,867

2,146,248

12,903,463

37.81%

836,978

37.88%

2078

41,836,483

4,007,957

14,649,003

35.01%

1,611,465

35.47%

2100

51,286,277

6,653,460

17,203,170

33.54%

2,641,438

34.25%

Intervention: Birth Rate 2

Current (C) Scenario Birth Rate: 13.6 births/1000 people/year

(C) Scenario Birth Rate: 13.6 births/1000 people/year Effect of Increasing Birth Rate Proposed (P) Scenario Birth

Effect of Increasing Birth Rate

Proposed (P) Scenario Birth Rate: 20 births/1000 people/year

(P) Scenario Birth Rate: 20 births/1000 people/year   Population (C) Population Change (P) Labour
 

Population (C)

Population Change (P)

Labour Force/Participation (C)

Labour Force Increase/Participation (P)

2012

22,710,000

0

11,913,000

52,46%

0

52.46%

2034

27,839,609

4,153,547

11,983,488

43.04%

1,271,393

41.43%

2056

34,127,867

10,943,117

12,903,463

37.81%

4,195,846

37.94%

2078

41,836,483

21,658,147

14,649,003

35.01%

8,581,765

36.59%

2100

51,286,277

38,163,024

17,203,170

33.54%

15,006,424

36.01%

Challenges and Lessons Learned

Important to clearly define the problem

Modeling is an iterative process

Had to make assumptions to simplify

model

Conclusion

Best policy for increasing workforce is increasing net overseas migration

Fast and effective

However, workforce ratio decreases under

ALL scenarios

For an optimal and sustained effect, a

combination of policies run in succession

are required

References

"World Birth rate Demographics". Indexmundi.com. Viewed 15 May 2014.

• “The World Factbook”. <https://www.cia.gov/library/publications/the-world-factbook/ rankorder/ 2066rank.html> Viewed in 15 May 2014.

ABS, 2013. Population Projections Australia. Canberra: Australian Bureau of Statistics.

International Labor Organization (October 1982). "Resolution concerning statistics of the economically active population, employment, unemployment, and underemployment, adopted by the Thirteenth International Conference of Labor Statisticians; see page 4". Viewed 15 May 2014.

• “Part-Time Work Information Sheet” , International Labour Organization. < http://www.ilo.org/travail/ lang--en/ index.htm>. Viewd 15 ay

2014.

United Nations. Report of the Economic and Social Council for 1997. A/52/3.18 September 1997.

Maani, KE and Cavana, RY 2000, “Systems Thinking and Modelling: Understanding Change and Complexity”, Prentice Hall, Auckland.

http://www.abc.net.au/pm/content/2003/s860631.htm

Workforce Participation Rates How Does Australia Compare?

http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6238.0Main%20Features3July%202012%20to%20June%202013?opendocume

nt&tabname=Summary&prodno=6238.0&issue=July%202012%20to%20June%202013&num=&view=