What Is the Contribution of the Educational Expansion on the Demographic Dividend in Europe?

Tanja Istenic, University of Ljubljana, Faculty of Economics
Elisenda Renteria, Center for Demographic Studies
Jože Sambt, University of Ljubljana, Faculty of Economics
Guadalupe Souto, Universitat Autònoma de Barcelona

All European countries have undergone the demographic transition, but at a different pace and ending with diverse levels of fertility and mortality. The result is a disparate panorama of aging populations where the implications of the so called demographic dividend, fostered in many cases by a baby boom generation that have started to retire, have had very different implications. At the same time, education expansion has also occurred almost universally, but again, at different rates and levels, and this has been pointed out as a solution to reduce the pressure of population ageing on the economy. Here we estimate the demographic dividend from the economic perspective, taking into account the changes that are occurring in the level of human capital of individuals and simulate the implications of a changing age and education structure on the evolution of the economic support ratio (ESR) in Europe. We use National Transfer Accounts methods to derive age patterns of production and consumption by level of education and apply them on education-specific population projections to estimate the ESR growth rates from 1970 to 2100 for 15 European countries. Preliminary results show that during 1970-2010 period the evolution of the ESR was positive for the majority of countries, meaning that the number of producers was growing faster than the number of consumers, driven by both a favorable age and education structure. However, it is interesting that a positive effect of the age dimension of the demographic dividend in a positive ESR growth is not observed in all countries (i.e. Czech Republic, Estonia, Hungary, Lithuania and Latvia), meaning that ESR growth before 2010 was due to the educational expansion observed during the 1980-2010 period. Around 2010, many countries start a negative ESR growth, that is not always compensated by the education expansion.

Presented in Session 105: Impacts of Population Ageing