Māori and the Potential (Collateral) Demographic Dividend Natalie Jackson Professor of Demography, Director, National Institute of Demographic and Economic Analysis (NIDEA) Session Address to PANZ Conference, Auckland Monday 29 th November 2011 NIDEA 1
The Demographic Dividend Arises out of demographic transition as fertility rate falls, % at working age (15-64 years) increases, % notionally dependent (0-14 plus 65+ years) is at its minimum Has the potential to convert into an economic bonus sometimes called the demographic gift Does not convert into an economic bonus by itself that requires awareness, planning, leadership, investment More a window of opportunity (Pool passim) First noted in 1990s as the demographic bonus Growing awareness that population size less important to economic development than age composition NIDEA 2
From Baby Boom to Potential Bonus Total NZ 1971-1991 1971 1991 age 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Males 7.5 5.0 2.5 0.0 2.5 5.0 7.5 Percentage at each age Females age 85+ 80-84 Male Females 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 7.5 5.0 2.5 0.0 2.5 5.0 7.5 Percentage at each age NIDEA 3
The concept develops.. At first only one dividend maximum percentage at key working age, minimum notionally dependent. Two main indices: Dependency Burden (notionally dependent/wap) Potential Support Ratio (WAP/notionally dependent) As fertility falls and WAP increases: The Dependency Burden decreases The Potential Support Ratio increases Eventually increased longevity drives a reverse in these #1 Transient - critically requires investment in human capital (education) and full employment policies Bloom and Williamson 1998, World Bank Economic Review 12 NIDEA 4
The Second Demographic Dividend A second dividend theorised as percentage passing through highest income earning age groups (NZ = 40-49 years) increases Parenting responsibilities diminishing Maximum period of saving for retirement begins Maximum proportions of pop. not yet at older age Potentially permanent, but dependent on adequate investment in First Dividend, and old-age support systems that encourage saving National Transfer Accounts System needed to trace flows from producing to consuming population Mason and Lee 2006, Genus 62(2) NIDEA 5
A third interpretation A collateral dividend arising from the historical coincidence of a youthful population co-existing alongside an older population Māori and Pakeha/European Māori also largest Indigenous population among Settler countries (Canada 3%; Australia 2.5%) Many economic opportunities as significantly older Pakeha population retires Each year for next 2 decades a successively larger baby boomer cohort will retire and be replaced by a successively smaller cohort NIDEA 6
Māori and European 2006* Māori * (med. age 23) European/NZ/Other* (med. age 38) age 90+ 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Males 7.5 5.0 2.5 0.0 2.5 5.0 7.5 Percentage at each age Females age 90+ 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Male Females 7.5 5.0 2.5 0.0 2.5 5.0 7.5 Percentage at each age *Stats NZ Multiple count ethnicity (Census Base) NIDEA 7
Population Share by ethnic affiliation* and broad age group, 2006 European/ Māori Pacific Asian NZ/Other Island 0-14 61% 20% 10% 8% 15-24 61% 17% 8% 13% 25-54 72% 13% 6% 10% 55-64 83% 8% 3% 6% 65+ 89% 5% 2% 4% Total 71% 14% 7% 9% *Stats NZ Multiple Count Ethnicity NIDEA 8
Māori and European 2026* Māori * (med. age 25) European/NZ/Other* (med. age 42) age 90+ 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Males Females 7.5 5.0 2.5 0.0 2.5 5.0 7.5 age 90+ 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Males Females 7.5 5.0 2.5 0.0 2.5 5.0 7.5 Percentage at each age Percentage at each age *Stats NZ Multiple count ethnicity (Series 6) NIDEA 9
Relative size by age 2026* *Stats NZ Multiple Count Ethnicity NIDEA 10
Has the first dividend for Māori already passed? - Is the second compromised? - NIDEA 11
Percentage by broad age group 1911-2026 Māori* 70 60 Observed Projected (Series 6) Percentage 50 40 30 20 10 0-14 15-64 65+ 1966 0 1911 1916 1921 1926 1936 1945 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 *Discontinuities due to changing Census classification NIDEA 12
Potential Support Ratio 1911-2026: Māori* Observed Projected (Series 6) 1961 2006 *discontinuities due to changing Census classification NIDEA 13
Add the context of an ageing New Zealand -Not [only] the conventional kind- -Unfolding very unevenly by region, ethnicity, industry NIDEA 14
NZ ageing not [only] the conventional kind Who you gonna call? Age-Sex Structure, NZ 2010 age Gen TGYH 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Males Baby Boomers Gen X 1991 Baby Blip Gen Y Current Baby Blip Females 5.0 4.0 3.0 2.0 1.0 0.0 1.0 2.0 3.0 4.0 5.0 NIDEA 15 Percentage at each age
Staggering changes in the ratio of young to old ahead Total NZ Series 5 2011-2016 (4.6%) 65+ Years All other age groups combined 19.1% 2.4% 2011-2026 (12.8%) 61.0% 5.4% Stats NZ (2009) Series 5 = TFR 1.9; ANM 10,000 NIDEA 16
Ageing very uneven across the country Wairoa 2010 (2006 unshaded) Napier2010 (2006 unshaded) age 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Males Females age Males 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Females 5.0 2.5 0.0 2.5 5.0 Percentage at each age 5.0 2.5 0.0 2.5 5.0 Percentage at each age NIDEA 17
Ageing differs by ethnicity across the country (Hastings 2006) European/NZ (15.2% 65+) Māori (4.0% 65+) 85+ 80-84 Male Females 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Median age 39.6 6.0 4.0 2.0 0.0 2.0 4.0 6.0 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Males Females 6.0 4.0 2.0 0.0 2.0 4.0 6.0 Median age 22.5 Percentage at each age Census 2006 NIDEA 18
Ageing differs by industry across the country Males Females Statistics New Zealand Customised Database (Census 2006) NIDEA 19
A pertinent comment people from countries where the first demographic dividend has already disappeared can invest their assets accumulated in the form of the second demographic dividend in dynamically growing economies that are enjoying their first demographic dividend, and, by doing so, bring a sizeable amount of financial gain back to their home countries Ogawa et al. 2010: 115 Can this not occur within countries? NIDEA 20
Converting the collateral potential to a dividend Labour shortages are assured as population ageing unfolds Already here - will be extreme in many regions and industries A new agriculture boom beginning The collateral dividend is a unique window of opportunity for NZ #1 transient; dependent on forward planning and a priori investment in human capital (education) and full employment policies Appropriate education (trades and skills; nursing) #2 potentially permanent but dependent on investment in #1 and appropriate policy environment Currently manifesting for European population #3 investment requirements same as #1 but potentially permanent returns for all parties State and iwi investment in Māori will be well rewarded No investment will commit NZ to a demographically-driven economic crisis NIDEA 21
Thankyou natalie.jackson@waikato.ac.nz www.waikato.ac.nz/nidea NIDEA 22