Declining Fertility and Rising Cost of Children and the Elderly in East Asian Countries Naohiro Ogawa Andrew Mason Rikiya Matsukura Amonthep Chawla An-Chi Tung 7 th Global NTA Meeting: Population Aging and the Generational Economy, June 11-12, 2010, Honolulu, Hawaii
Figure 1. Proportion of the population with below replacement-level fertility in Asia s total population 100 (%) 90 80 70 60 50 40 30 20 10 0 1955-1960 1950-1955 1965-1970 1960-1965 1975-1980 1970-1975 1990-1995 1985-1990 1980-1985 2000-2005 1995-2000 2010-2015 2005-2010 2020-2025 2015-2020 2030-2035 2025-2030 2045-2050 2040-2045 2035-2040 Year Source: United Nations, Department of Economic and Social Affairs, Population Division, World Population Prospects: The 2008 Revision, New York, 2009 (advanced Excel tables).
(million persons) 35 Fluctuation in the number of children in four selected Asian countries and regions, 1950-2056 30 1979 25 20 1981 15 1973 10 5 1984 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Japan Republic of Korea Thailand Taiwan Province of China Data for Japan for 1950-2008: Statistics Bureau of Japan, various years, Population estimates; and 2009-2025 Ogawa et al. (2003) NUPRI Population Projection. Data for Republic of Korea, and Thailand: United Nations, Department of Economic and Social Affairs, Population Division, World Population Prospects: The 2008 Revision, New York, 2009 (advanced Excel tables). Data for Taiwan Province of China until 2007: Council for Economic Planning and Development of Taiwan, Taiwan Statistical Data Book 2002 and 2009. Data for the period 2008-2056: Council for Economic Planning and Development of Taiwan, Population Projections for Taiwan Areas: 2008-2056.
Figure 6. Age-specific profiles of per capita consumption and production: Japan, 1984-2004 6 Million yen (measured in 2000 constant price) 5 4 3 2 1 Labor income 1999 Labor income 2004 Labor income 1994 Labor income 1989 Labor income 1984 Consumption 2004 Consumption 1999 Consumption 1994 Consumption 1999 Consumption 1984 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age
5.0 1984 4.0 3.0 2.0 Million yen 1.0 0.0-1.0-2.0-3.0-4.0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age Public transfers Private transfers Asset based reallocations Life cycle deficits
5.0 1989 4.0 3.0 2.0 Million yen 1.0 0.0-1.0-2.0-3.0-4.0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age Public transfers Private transfers Asset based reallocations Life cycle deficits
5.0 1994 4.0 3.0 2.0 Million yen 1.0 0.0-1.0-2.0-3.0-4.0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age Public transfers Private transfers Asset based reallocations Life cycle deficits
5.0 1999 4.0 3.0 2.0 Million yen 1.0 0.0-1.0-2.0-3.0-4.0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age Public transfers Private transfers Asset based reallocations Life cycle deficits
5.0 2004 4.0 3.0 2.0 Million yen 1.0 0.0-1.0-2.0-3.0-4.0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age Public transfers Private transfers Asset based reallocations Life cycle deficits
Our recent work on the declining fertility and the rising cost of children in East Asian countries Asian Population Studies, Vol.5, No.3, 2009, by the same authors
Calculation of child cost 1 Lifecycle deficit (LCD)from age 0 to the self-supporting age (24 years old for 1984 and 26 years old for 2004) 2 Standardized by mean labor income age 30-49 (for international comparison) 3 13.0 years for Japan in 2004 compared with 9.6 years for 1984 4 TFR dropped from 1.81 to 1.29
Sampled countries The same computation was applied to NTA s Asian countries (1977-2004, 47 observed values) Taiwan has the highest value of the per capita normalized LCD for children: 14 years in 2003 East Asian group: Japan, South Korea, Taiwan, and Thailand
Figure 5. TFR vs. normalized per capita LCD for children in selected Asian countries 25 20 Child LCD / YL (30-49) 15 10 JPN(04 JPN(99) KOR(04) JPN(94) JPN(89) THAI(04) JPN(84) ln(child LCD)=3.0548-1.151 ln(tfr) R 2 =0.526 5 0 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 TFR
Figure 6. TFR vs. normalized per capita LCD for children in Japan, 1984-2004 25 20 Child LCD / YL (30-49) 15 10 ln(child LCD)=2.893-1.080 ln(tfr) R 2 =0.924 5 0 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 TFR
9 Figure 7. TFR vs. normalized per capita human capital spending for children in selected Asian countries 8 Child human capital / YL (30-49) 7 6 5 4 3 JPN(04) JPN(99) JPN(94) KOR(04) JPN(89) THAI(04) JPN(84) ln(child human capital )=2.131-1.695 ln(tfr) R 2 =0.609 2 1 0 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 TFR
Quantity-Quality Tradeoff: interpretation of elasticities ln C = b0 +b1 ln N where C=cost per child and N=number of children ln CN (cost per adult) = b0 + (b1+1) ln N KEY: b1 > -1 or <-1
One of the major criticisms we encountered was: The amount of resources allocated to children must be heavily dependent upon the amount of resources allotted to the elderly
In this new paper, therefore, we examine both the cost of children and the elderly in the context of declining fertility in East Asia Is the amount of resources allocated to children crowed out by the increasing amount of resources for the elderly?
Asian Data East Asia South Korea 2000 Japan1984 1989 1994 1999 2004 Taiwan 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 19921993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Other Asian countries Thailand 1981 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Philippines 1999
Consumption 0-24 20 18 16 Consumption 0-24 / income 30-49 14 12 10 8 6 Taiwan Japan 4 2 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Private Consumption 0-24 14 12 Consumption 0-24 / income 30-49 10 8 6 4 Taiwan Japan 2 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Private Consumption, education 0-24 4.5 4 3.5 Consumption 0-24 / income 30-49 3 2.5 2 1.5 Taiwan Japan 1 0.5 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Proportion of private spending in per capita educational costs for children aged 0-24 in selected countries Country Year (%) Sweden 2003 3.1 France 2001 5.0 Austria 2000 5.8 Slovenia 2004 8.7 Hungary 2005 11.1 United States 2003 17.0 Costa Rica 2004 22.3 Japan 2004 26.0 Chile 1997 39.4 Indonesia 2004 39.6 Uruguay 1994 46.4 The Philippines 1999 48.2 Republic of Korea 2000 54.2 Taiwan 2003 66.8
Private Consumption, health 0-24 0.4 0.35 Consumption 0-24 / income 30-49 0.3 0.25 0.2 0.15 0.1 Taiwan Japan 0.05 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Public Consumption 0-24 7 6 Consumption 0-24 / income 30-49 5 4 3 2 Taiwan Japan 1 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Public Consumption, education 0-24 4 3.5 Consumption 0-24 / income 30-49 3 2.5 2 1.5 1 Taiwan Japan 0.5 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Public Consumption, health 0-24 0.8 0.7 Consumption 0-24 / income 30-49 0.6 0.5 0.4 0.3 0.2 Taiwan Japan 0.1 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Consumption 65+ 25 20 Consumption 65+ / income 30-49 15 10 Taiwan Japan 5 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Private Consumption 65+ 16 14 12 Consumption 65+ / income 30-49 10 8 6 4 Taiwan Japan 2 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Private Consumption, health 65+ 1.6 1.4 1.2 Consumption 65+ / income 30-49 1 0.8 0.6 0.4 Taiwan Japan 0.2 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Public Consumption 65+ 9 8 7 Consumption 65+ / income 30-49 6 5 4 3 Taiwan Japan 2 1 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
Public Consumption, health 65+ 7 6 Consumption 65+ / income 30-49 5 4 3 2 Taiwan Japan 1 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Year
20 18 16 14 12 10 JAPAN 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 TFR 8 Consumption / Labor income 30-49
20 18 16 14 12 10 TAIWAN 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 TFR 8 Consumption / Labor income 30-49
ALL ASIA Dependent variable TFR Taiwan dummy ADJ. RSQ Consumption 0-24 -0.0951-0.019 Private consumption 0-24 Private education consumption 0-24 Private health consumption 0-24 0.0527-1.8495 0.7054-0.023 0.307 0.037 Public consumption 0-24 -0.4693 0.108 Public education consumption 0-24 Public health consumption 0-24 -0.7915-1.7345 0.084 0.352
EAST ASIA Dependent variable Consumption 0-24 Private consumption 0-24 Private education consumption 0-24 Private health consumption 0-24 Public consumption 0-24 Public education consumption 0-24 Public health consumption 0-24 TFR -0.7578-0.8256-2.2651 0.0135-0.6069-0.9578-3.1033 Taiwan dummy 0.1254 0.1508 1.1164 0.1839 0.0834-0.3515 0.0170 ADJ. RSQ 0.553 0.479 0.711-0.007 0.469 0.751 0.486
TAIWAN Dependent variable Consumption 0-24 Private consumption 0-24 Private education consumption 0-24 Private health consumption 0-24 Public consumption 0-24 Public education consumption 0-24 Public health consumption 0-24 TFR -0.8009-0.9461-2.0378-0.3944-0.5037-0.8797-3.3417 Taiwan dummy ADJ. RSQ 0.573 0.587 0.669 0.071 0.476 0.555 0.482
JAPAN Dependent variable TFR Taiwan dummy ADJ. RSQ Consumption 0-24 -0.4216 0.889 Private consumption 0-24 0.1286 0.263 Private education consumption 0-24 -3.8887 0.806 Private health consumption 0-24 Public consumption 0-24 Public education consumption 0-24 Public health consumption 0-24 3.1263-1.4369-1.6401-1.2989 0.341 0.899 0.902 0.832
ALL ASIA Dependent variable Consumption 0-24 Private consumption 0-24 Private education consumption 0-24 Private health consumption 0-24 Public consumption 0-24 Public education consumption 0-24 Public health consumption 0-24 TFR -0.0978 0.0499-1.8469 0.7006-0.4715-0.8128-1.7481 Consumption 65+ 0.7813 0.8341-0.7642 1.4202 0.6640 1.0785 0.6886 Taiwan dummy ADJ. RSQ 0.857 0.839 0.433 0.641 0.757 0.628 0.502
EAST ASIA Dependent variable TFR Consumption 65+ Taiwan dummy ADJ. RSQ Consumption 0-24 -0.3713 0.3084 0.535 Private consumption 0-24 -0.4410 0.2769 0.417 Private education consumption 0-24 -2.0071-0.9852 0.128 Private health consumption 0-24 Public consumption 0-24 Public education consumption 0-24 Public health consumption 0-24 0.5107-0.2251-0.3825-1.0840 0.3706 0.3514 1.0799 2.3472-0.032 0.563 0.822 0.724
EAST ASIA Dependent variable Consumption 0-24 Private consumption 0-24 Private education consumption 0-24 Private health consumption 0-24 Public consumption 0-24 Public education consumption 0-24 Public health consumption 0-24 TFR -0.3591-0.4273-1.9414 0.5277-0.2152-0.3942-1.0555 Consumption 65+ 0.5803 0.5796 0.4710 0.7482 0.5700 0.8202 2.9800 Taiwan dummy 0.2233 0.2486 1.1958 0.3101 0.1795-0.2132 0.5196 ADJ. RSQ 0.799 0.653 0.713 0.063 0.792 0.885 0.783
TAIWAN Dependent variable Consumption 0-24 Private consumption 0-24 Private education consumption 0-24 Private health consumption 0-24 Public consumption 0-24 Public education consumption 0-24 Public health consumption 0-24 TFR -0.1904-0.2555-0.8260 0.0892-0.0570-0.4104-0.4904 Consumption 65+ 0.9022 1.0207 1.7906 0.7148 0.6602 0.6935 4.2136 Taiwan dummy ADJ. RSQ 0.969 0.959 0.946 0.232 0.928 0.731 0.903
JAPAN Dependent variable TFR Consumption 65+ Taiwan dummy ADJ. RSQ Consumption 0-24 -0.1016 0.3816 0.910 Private consumption 0-24 0.4242 0.3526 0.238 Private education consumption 0-24 -3.7897 0.1180 0.709 Private health consumption 0-24 3.5069 0.4538 0.013 Public consumption 0-24 -1.1470 0.3458 0.853 Public education consumption 0-24 -1.3002 0.4054 0.859 Public health consumption 0-24 -1.0970 0.2409 0.751
Does the crowding out effect exist in East Asia? Miller s comment: Asian countries are different from Latin American countries Lee s comment: East Asians have strong altruistic values toward their children, which are distinctively different from parents in other regions
Becker s quality-quantity tradeoff The decline in numbers may be offset by an increase in human capital and, hence, productivity.
International comparison of students mathematics literacy in PISA study: Mean scores Rank Country 2000 Country 2003 Country 2006 1 Japan 557 Hong Kong-China 550 Taiwan 549 2 Korea 547 Finland 544 Finland 548 3 New Zealand 537 Korea 542 Hong Kong-China 547 4 Finland 536 Netherlands 538 Korea 547 5 Australia 533 Liechtenstein 536 Netherlands 531 6 Canada 533 Japan 534 Switzerland 530 7 Switzerland 529 Canada 532 Canada 527 8 United Kingdom 529 Belgium 529 Macao-China 525 9 Belgium 520 Macao-China 527 Liechtenstein 525 10 France 517 Switzerland 527 Japan 523 11 Austria 515 Australia 524 New Zealand 522 12 Denmark 514 New Zealand 523 Bergium 520 13 Iceland 514 Czech Republic 516 Australia 520 14 Liechtenstein 514 Iceland 515 Estonia 515 15 Sweden 510 Denmark 514 Denmark 513 16 Ireland 503 France 511 Czech Republic 510 17 Norway 499 Sweden 509 Iceland 506 18 Czech Republic 498 Austria 506 Austria 505 19 United States 493 Germany 503 Slovenia 504 20 Germany 490 Ireland 503 Germany 504 Source:Ministry of Education, Culture, Sports, Science and Technology (2007). OECD Programme for International Student Assessment (PISA): Summary of the 2006 International Study Results,http://www.mext.go.jp/a_menu/shotou/gakuryoku-chousa/sonota/071205/001.pdf. (Last accessed on December 24, 2009).
Hong Kong, China Republic of Korea Average daily time spent by 8th graders on watching TV and video in selected countries in 2007 Japan Singapore Malaysia United States United Kingdom Sweden Norway Russia Australia Taiwan, China Italy Thailand Indonesia Turkey 0.0 0.5 1.0 1.5 2.0 2.5 Hours Source: National Institute for Educational Policy Research (2007).The 2007 Trends in International Mathematics and Science Study (TIMSS 2007): Report on the Findings of the International Study (Overview), http://www.nier.go.jp/timss/2007/gaiyou2007.pdf. (Last accessed on December 28, 2009).
Republic of Korea Japan United Kingdom Australia Thailand Sweden Indonesia United States Taiwan, China Hong Kong, China Norway Singapore Malaysia Turkey Italy Russia Average daily time spent by 8 th graders on homework in selected countries in 2007 0.0 0.5 1.0 1.5 2.0 2.5 Hours Source: National Institute for Educational Policy Research (2007).The 2007 Trends in International Mathematics and Science Study (TIMSS 2007): Report on the Findings of the International Study (Overview), http://www.nier.go.jp/timss/2007/gaiyou2007.pdf. (Last accessed on December 28, 2009).
Number of freeters and NEETs 450 (in 10,000 persons) 400 350 300 250 Freeters 200 150 100 NEETs 50 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year Source: Cabinet Office, 2003, White Paper on National Lifestyle 2003. Cabinet Office, 2005, Survey on young people not in employment (interim report).
Thank you