Demographic update

Tracking Trends in Low Fertility Countries

"Over the long term, TFRs below 2.1 children per woman can eventually lead to population decline because couples are not replacing themselves in the population. Many European countries have been far below the 2.1 replacement level for years and some are experiencing population decline as a result."

"Many reasons are given for very low fertility and the causes certainly vary from country to country. The rise in living costs and the need for two-earner families play a large role, particularly where childcare needs of two-earner families have been neglected. Changing values that place more emphasis on consumer goods and travel play some role. In Eastern Europe, economic collapse following the breakup of the Soviet Union and the Warsaw Pact in 1989 caused among the sharpest declines in TFRs."

"While countries certainly differ, the overall story seems to be the same. Countries whose policies recognize the need to accommodate two-earner families so that having a child is not an economic disaster appear to have had some success in raising TFRs. But the cooperation of society is also required. In Germany, it is often not socially acceptable to leave one’s child in someone else’s care the entire day; women who do are referred to as rabenmutter (raven mother). Such attitudes will have to change for Germany's fertility to increase significantly. In Japan, the cooperation of employers in lightening work schedules and introducing more flexibility as well as childcare has been mandated by the government. But even these measures can be overshadowed by recessions and a lack of confidence in the economic future."

Possible keys to living longer

The post Can Exceptional Longevity be Predicted? that hit the Longevity Science blog recently has some interesting findings (based on a small sample, so take them with a grain of salt).

The authors state that "scientists currently disagree on whether a small or a large body size is conducive to exceptional longevity. Historical demographers are confident that small body size is associated with increased mortality, while biologists are firmly convinced that a small body size is preferable for longevity." So if you are of either body type you can take comfort:)

Additionally, "Numerous historical studies have found that body height in young adulthood is a good indicator of a past history of nutritional and infectious diseases. Infectious diseases (and diarrheal diseases in particular) that were highly prevalent in the past clearly led to growth retardation and a shorter body height, making shortness a marker of an unhealthy childhood and impaired health." That doesn't seem too surprising. The followup states "It could be expected that shorter people raised in a less healthy environment would have higher death rates at older ages as well. In his pioneering study published in 1984, Norwegian demographer Hans Waaler found a negative relationship between body height and mortality later in life. Waaler’s initial findings were reproduced later in many other studies, including a famous study of U.S. Union Army Civil War veterans. According to these studies, future centenarians should be taller than their peers." It seems that longevity is yet one more advantage for the tall.

But wait: "Our study confirmed that obesity at young adult age (being stout at 30 years) is detrimental to attaining exceptional longevity, while height is a far less important factor. The findings that a stout build predicts much lower survival rates to age 100 were consistent with existing knowledge that particularly high body mass indexes (BMIs) and obesity are associated with increased mortality."

The question that comes to mind then is what is the effect of a person being not stout until after age 30? In other words, if a person starts to put on a few pounds in the 35-45 age range, is there a significant negative effect on longevity?

Global labor arbitrage is dead

If transportation cost increases due to the oil price shock erase the wage differential between US and China, the Chinese manufacturing sector is in deep trouble. Some manufacturing jobs may return to the US. The increase in oil prices is as big a threat to China as it is to the US.

How long to live?

This data is for US residents, check it to see how long the government expects your remaining lifespan will be:


Click on the image to zoom in...

Immigrants and fertility

In a thread on Fertility Trends in Europe...commenter Randy says

"it's worth noting that immigrant fertility worldwide, but particularly in the United States and France, might be biased upwards by provisions in nationality laws which grant citizenship to children born in a country, as a manifestation of the jus soli principle. This principle is still intact in American nationality law, less so in French nationality law since 1992 reforms. If one wants to remain in a country with a jus soli citizenship law, why not become a parent and count on not being separated from your citizen child? This incentive won't exist in later generations."

Excellent point!

US demography as of 2007

The US Census Bureau recently released its population estimates as of July 1, 2007. The data showing population change between 2006 and 2007 can be found here. The analysis showing components of population change can be found here. Notably, the population increase of just under 2.9 million amounted to only a 1% increase. International migration contributed only a little bit more than 1 million new residents or a measly .3% increase. A change of this magnitude is likely to cause minimal strain on the country's economic or social systems. Specifically, if one assumes a correlation between population growth and GDP growth(not unreasonable given that consumer spending makes up something like 70% of GDP), certainly 1% is nothing to get excited about in terms of GDP growth.

In terms of internal migration, the data shows that the Western region of the country had essentially zero net domestic migration. This is quite remarkable as for the last 30 years the West was attracting large numbers of migrants from the eastern part of the country.

The data distribution of population throughout the US is thought provoking. The government divides the country into four regions: Northeast, Midwest, South, and West. This categorization seems reasonable. The regions rank in population as follows: South-110 million, West-70 million, Midwest-66 million, and Northeast-55 million. So the region which has been the political and industrial leader of the US for most of its history now has the least population. Although there has been much discussion of outmigration from the Northeast and Midwest over the years, the magnitude of the gap in population levels between the traditional power centers and the South and West is now rather eye-popping. We should expect significant changes in US political and economic decision making in the future as a result.

Trends in land use and attitudes regarding the same in Europe

Newsweek International posted a story this summer to its website from its July 4, 2007 issue with a summary line as follows: “Economics and declining birthrates are pushing large swaths of Europe back to their primeval state, with wolves taking the place of people.” The article describes a trend in Europe’s rural areas of “ultralow birthrate(s) and continued rural flight”…to the extent that “rural flight continues to suck people into Europe's suburbs and cities.” The UN and EU are quoted to the effect that by 2030 the rural areas of the EU 25 “will lose close to a third of its population.”

The article describes some examples of changes in wildlife populations:

“In 1998, a pack of wolves crossed the shallow Neisse River on the Polish-German border. In the empty landscape of Eastern Saxony, speckled with abandoned strip mines and declining villages, the wolves found plenty of deer and rarely encountered humans. They multiplied so quickly that a second pack has since split off, colonizing a second-growth pine forest 30 kilometers further west.”

“In Swiss alpine valleys, farms have been receding and forests are growing back in. In parts of France and Germany, wildcats and ospreys have re-established their range.”

Bizarrely, some environmental groups in Europe don’t want farmland to revert to a wild state. The article claims that “The scrub brush and forest that grows on abandoned land might be good for deer and wolves, but is vastly less species-rich than traditional farming, with its pastures, ponds and hedges”, and quotes Jan-Erik Petersen, a landscape biologist at the European Environmental Agency in Copenhagen as saying that "Once shrubs cover everything, you lose the meadow habitat. All the flowers, herbs, birds and butterflies disappear…a new forest doesn't get diverse until it's a couple of hundred years old." Such ideas seem to contradict the goals of environmental groups in the US which as far as I can tell seek to allow farmland to revert to a natural state. I doubt that there is meaningful research that supports Petersen’s assertion.

The article states that ‘Keeping biodiversity up by preventing the land from going wild is one of the reasons the EU pays farmers to mow fallow land once a year. France and Germany subsidize sheep herds whose grazing keeps scenic heaths from growing in.” That seems absurd to me. The article goes on to say that “Outside the range of these subsidies—in Bulgaria, Romania or Ukraine—big tracts of land are returning to the wild.” I seriously doubt that biodiversity will be a problem in these areas.

The article describes an attitude toward the landscape such that it “is glued to the European identity, reflecting what the Germans call "Kulturlandschaft"—a landscape shaped by centuries of human care”, and says that “Many Europeans are reluctant to just let nature do its thing.” This attitude doesn’t seem to square with the seeming momentum of Europe’s Green movement, and certainly has received very little attention in the US.

The children of young mothers live longer

That is the conclusion of research done by Dr. Leonid Gavrilov, Ph.D., and Dr. Natalia S. Gavrilova, Ph.D., both of the University of Chicago. Dr. Leonid Gavrilov summarizes the conclusion at his blog as follows: "We recently found that it helps a lot to be born to a particularly young mother (before age 25 years)". That seems intuitively right as women (and men) are in prime health before age 25, and therefore the female body would be able to provide the best environment for a growing baby.

The title of their paper begins with the phrase "Search for Predictors of Exceptional Human Longevity." Clear positive identification of such predictors of course would be of earth-shattering value. The Gavrilovs do not claim to have done this, of course, but rather in their paper indicate possible predictors identified through novel use of information technology to analyze demographic data. They looked at "the detailed family data for 991 alleged centenarians born between 1875 and 1899."

If the study's conclusion that being born to a young mother does indeed lead to exceptional longevity is borne out by further research, it would certainly lead to a re-thinking of child-bearing decisions by couples. This would have significant effects on the global demographic profile.

On shortages...

There will never be shortages of resources in the world, but only shortages of human creativity and inspiration...

Japan's Low Fertility

Over at Japan Economy Watch, Edward Hugh has posted an excellent essay on the above subject, with links to supporting data and related essays available on the web. In particular, take note of the list of similarities in the situations of the "three most "elderly" societies in terms of median age - Japan, Germany and Italy"...

I think the similarities between Germany, Japan, and Italy on Edward's list are all accurate. It is rather coincidental that the three most elderly societies happen to be the countries that formed the Axis during WWII; but I do think it is merely coincidence. In the cases of Japan and Italy, a major factor in the rapid decrease in fertility has been the rejection/decline of family
norms that had supported fertility. In Italy, the Roman Catholic church's positions on birth control, abortion and divorce had served to facilitate high fertility, but with certain general changes by the Vatican in the 1960's I think served to motivate Italians to feel free to reject Catholic doctrines beyond those that were changed, and therefore they rapidly adopted particularly modern birth control methods. In Japan, somewhat more recently, young women have been rejecting the traditional family system where women married, moved into a house with their husband and inlaws, and did not expect to work. Perhaps that is a blinding flash of the obvious, but I think that the rapidity of the change in attitudes among young women in Japan towards avoiding the burdens of traditional marriage and therefore having children is remarkable. I think it boils down to the idea that the traditional family in Japan has been much more burdensome on the wife than in other countries; particularly the USA and Germany, and so given the opportunity Japanese women have been rejecting the traditions wholesale because they don't want to get trapped into a traditional system.

In Germany, of course, Catholicism has not had as strong of an influence as in Italy. It has been more of a case of West Germany reaching US levels of prosperity more rapidly than Japan or Italy, and therefore young people bought into postponing childbirth for economic reasons.

I think a danger to these three countries as great as that of low fertility is their resistance to in-migration of individuals of differing ethnic backgrounds due to their national identities and political systems being based on ethnicity rather than on a set of principles (as opposed to the USA, UK and France which naturalize immigrants of any race). I suppose this attitude might be somewhat less prevalent in Italy due to its central Mediterranean location and historical political turbulence. In the case of Japan, rapid shrinkage of the population would likely make that country even more dependent on the USA for its military defense, the consequences of which are hard to foresee.

Recent migration patterns in Europe

In a discussion thread attached to a post on "Fertility News" at Demography Matters, Edward Hugh points out some recent data on this subject. First,

"this week the figures for inward migration to Spain for 2006 were released, and surprisingly (perhaps, for some), there were only 13,000 migrants from Morocco, as compared with over 100,000 from Romania. Thus - and as forecast in this post - migration out of Morocco is now more or less done as fertility in Morocco steadily falls towards replacement level and the country starts to develop. Same case Turkey, despite all the preoccupations inside the EU about what might happen when Turkey becomes a member"

Since Romania is a member of the EU, it is not suprising that there has been significant migration relative to that from countries outside the EU, as migration within the EU is significantly easier than the alternative case. Also, the fact that developing countries' fertility rates are converging towards those of the developed world is important to remember and has a significant effect on the pool of potential migrants.

Edward also notes that

"Looking around the low fertility countries I am struck by some similarities which I see between four of them: Germany, Japan, Italy and Poland. All four of these have very low fertility, and all four of them are characterised by having had very conservative attitudes to family values, values which are then increasingly out of harmony with the aspirations of the newer generations of young women.Three of these countries are now suffering from protracted economic problems which only seem to contribute to sustaining the low fertility, while the fourth - Poland - is currently growing rapidly, but given the massive outflow of young people which has recently taken place, would seem - as I have argued in recent posts - to face imminent capacity problems which may well put a break on growth. As and when this takes place it will indeed be interesting to see what happens next."

The shift in fertility in countries that Edward mentions above took place without any kind of overt governmental "natalist" policy such as that implemented by China.

Mass migrations occurring in Europe

A thought provoking series of analyses of the prospects for economic growth in Eastern Europe has been posted over at demography.matters.blog which uses Poland's situation as a basis for a larger analysis. The posts include links to a number of primary data sources that contain a wealth of detail that would allow for more in-depth analysis.

The primary fact that caught my attention was a quote from the Financial Times which indicates that

"Poland has seen one of the largest peacetime migrations in history as about 1m people, many of them young, have moved west to find work, although there are no hard official numbers. There are estimated to be 250,000 Poles in Ireland, about 500,000 in Britain and more than 600,000 in Germany."

These emigrants are said to be primarily young college graduates. So Poland appears to be experiencing a classic "brain drain." The consequences of this are described in some detail; with the primary result being that Poland will have difficulty building up high-value industries due to the loss of the educated. One possible solution postulated by a commenter was that Poland could attract educated individuals from countries further east such as the Ukraine.

This sort of migration pattern and the resulting economic dislocations are in my view the inevitable result of the absorption of Poland and other eastern European countries into the EU and the application of the EU's regulations (and lack thereof) to flows of people and capital. In the long run, these changes will be beneficial to the EU as nationalism within the EU will break down as individuals' loyalty will shift to the EU and its institutions from their home states(nations). I think this process is analogous to the development of the USA as in its early days citizens in the US were more loyal to the individual states(Massachusetts, Virginia, and so forth); but as time went on and the federal government expanded its powers US citizens as a rule have come to see the federal Constitution and government institutions as a primary focus of loyalty and economic strength. As anyone familiar with US history can attest, this did not occur quickly or without significant stresses. However, the result is a country that is strong economically and militarily, with little internal armed conflict. Given the past history of countries in the EU, we can only hope that a similar outcome is in the cards for the EU.

Home building in the US

With regard to the new home sales chart, I find it interesting that between 1971 and 1997, a period of 26 years where there was significant population growth in the US, the sales number stayed in a range between 400 on the low side and 800 on the high side. The number didn't break out permanently above 800 until 1998. Then the number stayed in a range between 800 and 1000 until the sharp increase around about the middle of 2003, a five year period. The striking thing about the current decline from the peak number of almost 1400 to approaching 800 is that this decline of almost 600k is larger in absolute numbers already than any of the dropoffs recorded in this chart.

It seems to me that during the 26 year time frame there were three factors that capped home affordability and therefore the peak levels of new home sales. In the 1970's general inflation was the culprit; first time homebuyers couldn't come up with enough down payment to buy because home prices were rising too fast and it didn't make sense for existing homeowners to try to move up because few could afford their current house and even with increased equity from the existing house a new house wouldn't be affordable due to the general inflation. In the 1980's the jack-up of interest rates to kill inflation also quashed the ability of pretty much anyone to get into a new home, and rates stayed relatively high so that as the economy recovered the volume of folks able to get into a home for the first time stayed capped. Then the post-Cold War defense cutbacks shrank incomes and limited the demand for new homes. Interest rate cuts by the Fed to counteract the early 1990's recession helped move sales rates up, but it wasn't until the inventory overhang from the housing bust in California was depleted and the internet economic boom kicked into gear around 1997 that demand for new houses reflected the population increases that had taken place during the span of the previous 26 years.

Also, from the chart it seems you could pinpoint when the mortgage industry decided to start pushing the teaser loans and no doc loans to about the middle of 2003. The increase in sales from the end of the recession to early 2003 could be attributed to the Fed's cuts in rates which made housing more affordable and hence increased sales, but then as the effect of that wore off and you see the downward spike in late 2002/early 2003; it makes sense that the industry would try to figure out how to keep the ball rolling and came up with the loan tweaking system.

In addition to the overhang of new and existing homes for sale that exists now that is driving the massive decrease in new home sales, there is another factor that will extend the length of the home building downturn. At some point the yield curve is going to return to a normal slope, which means that long term rates(including mortgage rates) will go up, and that will further cap the peak prices that homes will sell for. I am afraid that the US will experience a residential real estate market analogous to the experience of Japan after the peak of its bubble in 1989.

College grads leaving California

According to the Mercury News; “With stratospheric housing prices pushing an unprecedented flow of college graduates out of the state, a prominent think tank says California faces a worrisome shortage in future decades: A lack of highly skilled workers to buttress the state’s quality of life.”

“Much of the worry is prompted by the new exodus of college graduates. Historically, college graduates have flocked to California from elsewhere in the United States. But according to PPIC’s analysis of Census data, since 2000, more college graduates have been leaving California for other states than are arriving.”

“‘It’s safe to say that certainly we haven’t seen this kind of flow out of the state in the past,’ said Hans Johnson, a PPIC demographer who co-authored the report. ‘Probably what’s happening now is unique in California’s history.’”

It seems that if enough time passes, prices of homes will drop enough to end this trend...in one part of Sacramento “At a recent courthouse auction, a five-bedroom, four-bathroom 3,500 square foot house on Richfield Way that sold in July 2005 for $526,000 was offered by the bank for $295,000. There were no takers.” That offering price is getting close to a 50% haircut. The massive overbuilding that has taken place throughout California will lead to significant price shrinkage throughout the state, but it may take ten years for the change to filter throughout the market.

I see the factors that drove California's home prices to such stratospheric levels as taking effect over a 35 year period from about 1973 until now. First, the advent of significant national general inflation in the 1970's moved home prices up along with the prices of other products. Second, the mass entrance of women into the workforce (which likely began earlier in California than the rest of the country) increased total household incomes of which a significant chunk went into buying more expensive homes. Third, the defense spending boom of the 1980's put a lot of cash into California as a large share of the defense industry was based in the state, which added to personal income available to spend on housing. At that point, due to the price appreciation of housing, the trend of buying homes primarily for the investment potential rather than just as a place to live pushed California prices to a peak in the late 1980's. The defense industry cutbacks of the 1990's poked a hole in that peak; but although prices fell somewhat and then remained flat for a few years, regression to price levels of the early 80's and late 70's did not occur. Then a combination of income from the dot-com boom, the persistent drop in long-term interest rates, and then finally the use of sketchy mortgage products pushed prices to their most recent peak.

Fertility in China

At demography.matters.blog Edward Hugh discusses what appears to be an emerging "birth rebound" in China attributed by the Chinese government to the idea that "Newly rich couples can afford to pay fines to have more than one child, while rural couples are marrying earlier."

It strikes me that one aspect of China's fertility policy that will have unpredictable social consequences sometime in the near(next twenty or so years) future is the gender imbalance that has resulted from the combination of the official one child policy and the well documented preference of Chinese couples for having a boy rather than a girl.

I also think that the gender imbalance will have an impact on future fertility rates as there will be a meaningful proportion of the Chinese population that will be unable to reproduce (i.e. all of those males that can't find a wife), and that any particular cohort that one might choose to look at will have lower than expected fertility due to the lack of females in the cohort. To me, this will skew fertility rates lower than a basic "size of the population of reproductive age" analysis might predict.

Likely effects of interest rate hike by Bank of Japan

The Economist describes how "a few brave economists believe, to the contrary, that higher interest rates would actually encourage (Japanese)households to spend more, not less."

I thought the most interesting piece of information from that story was the fact that personal savings rates in Japan have actually been falling essentially since the ZIRP was put into place("the sharp fall in the saving rate during the long period of low interest rates, from 14% of income in 1993 to 3% last year. (Although Japanese households have a massive stock of saving, their saving rate out of new income is now low.") I don't think I've seen that fact mentioned often in the financial media. I think this shows that the Japanese households have been responding to interest rate policy as one would expect. It also shows that the interest rate policy has been biased toward supporting the export markets. I don't see that as necessarily unwise since the BoJ is looking at the same demographic projections that we are and probably expects that since domestic markets will shrink, it is better to focus on export industries.

The article makes a persuasive case for raising rates as far as how that would effect exporters, but ignores the demographic situation when it talks about what the effect on the consumer will be. I think that if rates were raised, that wouldn't necessarily increase personal saving, as the retiring Japanese are going to need to spend what they've saved to support themselves. Younger Japanese might save more, but the large mass of older Japanese are reaching that point where they have to stop saving and start spending.

The article mentions the higher cost of government debt briefly; I think that would be one of the biggest problems with raising rates. Japan's public debt is one of the world's largest, so that higher interest cost might not necessarily be offset by increased GDP(particularly in light of the shrinking consumer base).

US fastest growing counties

100 Fastest Growing Counties

Population Estimates for the 100 Fastest Growing U.S. Counties with 10,000 or More Population in 2006: April 1, 2000 to July 1, 2006
Rank	Geographic Area	Population Estimates		Change, 2000 to 2006
		July 1, 2006	April 1, 2000 Estimates Base	Number	Percent
1	Flagler County, FL	83,084	49,835	33,249	66.7
2	Kendall County, IL	88,158	54,520	33,638	61.7
3	Rockwall County, TX	69,155	43,074	26,081	60.5
4	Loudoun County, VA	268,817	169,599	99,218	58.5
5	Forsyth County, GA	150,968	98,407	52,561	53.4
6	Pinal County, AZ	271,059	179,537	91,522	51.0
7	Douglas County, CO	263,621	175,766	87,855	50.0
8	Henry County, GA	178,033	119,344	58,689	49.2
9	Paulding County, GA	121,530	81,608	39,922	48.9
10	Lyon County, NV	51,231	34,501	16,730	48.5
11	Newton County, GA	91,451	62,001	29,450	47.5
12	Lincoln County, SD	35,239	24,147	11,092	45.9
13	Delaware County, OH	156,697	109,989	46,708	42.5
14	Collin County, TX	698,851	491,772	207,079	42.1
15	Union County, NC	175,272	123,738	51,534	41.6
16	Williamson County, TX	353,830	249,980	103,850	41.5
17	Osceola County, FL	244,045	172,493	71,552	41.5
18	Spencer County, KY	16,475	11,766	4,709	40.0
19	Washington County, UT	126,312	90,354	35,958	39.8
20	Fort Bend County, TX	493,187	354,471	138,716	39.1
21	Scott County, MN	124,092	89,498	34,594	38.7
22	Barrow County, GA	63,702	46,144	17,558	38.1
23	Lake County, FL	290,435	210,527	79,908	38.0
24	Cherokee County, GA	195,327	141,903	53,424	37.6
25	St. Johns County, FL	169,224	123,148	46,076	37.4
26	Hamilton County, IN	250,979	182,740	68,239	37.3
27	Matanuska-Susitna Borough, AK	80,480	59,322	21,158	35.7
28	Montgomery County, TX	398,290	293,768	104,522	35.6
29	DeSoto County, MS	144,706	107,199	37,507	35.0
30	Denton County, TX	584,238	432,966	151,272	34.9
31	Franklin County, WA	66,570	49,347	17,223	34.9
32	Jackson County, GA	55,778	41,589	14,189	34.1
33	Dallas County, IA	54,525	40,773	13,752	33.7
34	Hays County, TX	130,325	97,576	32,749	33.6
35	Wasatch County, UT	20,255	15,215	5,040	33.1
36	Will County, IL	668,217	502,267	165,950	33.0
37	Spotsylvania County, VA	119,529	90,393	29,136	32.2
38	Sherburne County, MN	84,995	64,415	20,580	31.9
39	Canyon County, ID	173,302	131,441	41,861	31.8
40	Tooele County, UT	53,552	40,735	12,817	31.5
41	Placer County, CA	326,242	248,399	77,843	31.3
42	Nye County, NV	42,693	32,512	10,181	31.3
43	Lee County, GA	32,495	24,757	7,738	31.3
44	St. Lucie County, FL	252,724	192,695	60,029	31.2
45	Riverside County, CA	2,026,803	1,545,387	481,416	31.2
46	Weld County, CO	236,857	180,861	55,996	31.0
47	Walton County, GA	79,388	60,687	18,701	30.8
48	Kaufman County, TX	93,241	71,310	21,931	30.8
49	Currituck County, NC	23,770	18,190	5,580	30.7
50	Pasco County, FL	450,171	344,768	105,403	30.6
51	Effingham County, GA	48,954	37,535	11,419	30.4
52	Culpeper County, VA	44,622	34,265	10,357	30.2
53	Stafford County, VA	120,170	92,446	27,724	30.0
54	Christian County, MO	70,514	54,285	16,229	29.9
55	Brunswick County, NC	94,945	73,141	21,804	29.8
56	Comal County, TX	101,181	78,021	23,160	29.7
57	King George County, VA	21,780	16,803	4,977	29.6
58	Douglas County, GA	119,557	92,244	27,313	29.6
59	Lee County, FL	571,344	440,888	130,456	29.6
60	Deschutes County, OR	149,140	115,367	33,773	29.3
61	Coweta County, GA	115,291	89,215	26,076	29.2
62	Wakulla County, FL	29,542	22,863	6,679	29.2
63	Clark County, NV	1,777,539	1,375,738	401,801	29.2
64	Dawson County, GA	20,643	15,999	4,644	29.0
65	Pickens County, GA	29,640	22,983	6,657	29.0
66	Sumter County, FL	68,768	53,345	15,423	28.9
67	Walton County, FL	52,270	40,602	11,668	28.7
68	Lincoln County, MO	50,123	38,946	11,177	28.7
69	Gwinnett County, GA	757,104	588,448	168,656	28.7
70	Berkeley County, WV	97,534	75,905	21,629	28.5
71	Boone County, KY	110,080	85,989	24,091	28.0
72	Benton County, AR	196,045	153,346	42,699	27.8
73	Wright County, MN	114,787	89,993	24,794	27.6
74	Suffolk city, VA	81,071	63,677	17,394	27.3
75	Prince William County, VA	357,503	280,813	76,690	27.3
76	Kendall County, TX	30,213	23,743	6,470	27.3
77	Clay County, FL	178,899	140,814	38,085	27.0
78	Ascension Parish, LA	97,335	76,627	20,708	27.0
79	Williamson County, TN	160,781	126,638	34,143	27.0
80	Warren County, OH	201,871	159,169	42,702	26.8
81	St. Croix County, WI	80,015	63,155	16,860	26.7
82	Bryan County, GA	29,648	23,417	6,231	26.6
83	Hernando County, FL	165,409	130,802	34,607	26.5
84	Utah County, UT	464,760	368,540	96,220	26.1
85	Hendricks County, IN	131,204	104,093	27,111	26.0
86	Rains County, TX	11,514	9,139	2,375	26.0
87	Boone County, IL	52,617	41,784	10,833	25.9
88	Scott County, KY	41,605	33,061	8,544	25.8
89	Hoke County, NC	42,303	33,646	8,657	25.7
90	Burnet County, TX	42,896	34,120	8,776	25.7
91	Rutherford County, TN	228,829	182,023	46,806	25.7
92	Pike County, PA	58,195	46,302	11,893	25.7
93	Sandoval County, NM	113,772	90,584	23,188	25.6
94	Fayette County, TN	36,102	28,796	7,306	25.4
95	Wake County, NC	786,522	627,865	158,657	25.3
96	New Kent County, VA	16,852	13,462	3,390	25.2
97	Collier County, FL	314,649	251,377	63,272	25.2
98	Archuleta County, CO	12,386	9,898	2,488	25.1
99	Ellis County, TX	139,300	111,358	27,942	25.1
100	Livingston Parish, LA	114,805	91,808	22,997	25.0

Some of the counties on this list are in unexpected states: Ohio and Illinois suprised me...

Deadline for avoiding pension crisis in Germany approaching

A paper in the European Journal of Political Economy posits that reforms to the German pension system will be politically viable until the year 2016, when the "politically decisive cohort" will be at the age where they will overwhelm any effort to reform the pension system through the electoral process.

My thoughts on this issue start off with how the young working populace of Germany will respond should pension reforms fail to be enacted as seems likely. One option is emigration; the younger cohorts will have less loyalty to any particular nation, and I think that could be extended to include less loyalty to the EU itself than some might think. I could see Germans emigrating to countries such as Australia or perhaps Canada(?) or even the USA, where the demographic and therefore tax imbalance is not so large. The other option would be to find employment/opportunity in the underground economy, where the tax authorities would have difficulty enforcing their levies. Perhaps holding down a part time legitimate job to maintain appearances, while doing off the books work in the rest of one's time would be an option for overtaxed Germans.

In either case, the result would be a further drop in tax revenue for the pension system making it even less sustainable. So the political outcome might be a bargain where the retirees accept reduced benefits in exchange for avoiding even greater reduced benefits due to a "silent rebellion" if you will, as I outlined above.

One factor that might postpone the pension crisis is the notable migration of workers from the countries newly admitted into the EU (and further east) towards the western countries. I have seen several articles in the business press that have noted a "brain drain" of young and educated workers from places like Romania and Ukraine to western Europe.

I think that the younger age groups tend to generate most of the innovation in developed economies, but capital is generally held by the older age groups. So a bargain will need to be struck between these two groups if aging societies are to maintain consistent economic growth.

Low Fertility Rates a Temporary Artifact of Demographic Transition?

Let's look at the proposition that although Western countries' populations in general are aging, global fertility rates will rise from current low levels at some point. This would be due to the idea that reproductive rates in western societies are down not because people no longer want to have kids, but because the part of the life cycle when it is seen to be economically feasible to raise children has shifted from the traditional reproductive age (20s-30s) to (40s-onward) and that as reproductive technology advances, childbearing age is being and will still be redefined to wider periods of life. As a result, we could expect to see an increase in the number of children of "aged" parents.

Just based on anecdotal evidence here in the US, it is fair to say that the shift in expectations as to when the ideal time to have children might be has definitely shifted to the 30-40 year old age range. And fertility technology has advanced to the point where women in their late thirties and forties are having children. There are some issues with the fertility technology, however. One is the increased likelihood of multiple births in a pregnancy. I don't have hard data at my fingertips but once again anecdotally couples that go to fertility clinics have a meaningfully higher rate of twins and triplets than couples who get pregnant the old-fashioned way. That could be a deterrent to the use of fertility technology, and damp the potential increase in total fertility.

Also, it is clear that women bear greater risk to their own health when pregnant their late thirties and forties, and there is increased risk of birth defects in the child as well. This also could dampen the use of fertility technology.

As far as ideal family size and the economic feasibility of having children are concerned, I believe that in countries today with low fertility rates, women have strong disincentives to having more children. Reduced personal income due to taking time off from work to bear and care for a child, and reduced personal time for studies, play, or work factor into the child-bearing decision. My impression of modern women of childbearing age in Europe and Asia is that careers and leading an independent life take precedence over raising children. I believe this is somewhat borne out by recent data found in a paper titled New Empirical Evidence on The Low Fertility Trap Hypothesis by Wolfgang Lutz, Vegard Skirbekk and Maria Rita Testa. A key finding published in this research identified by Claus Vistesen(which I paraphrase here) regards "the very recent evolution of ideal personal family size...based on data from Southern Europe and France. As we can see the decline might look ever so slight but once we get the figure in percentages it shows that the decline in some countries is pretty hefty given the fact that we are only talking about 5 years. Moreover, note that Italy's personal ideal family size is fast approaching below replacement levels and seeing that this is a lagging factor of actual fertility decline the evidence of a traps seems particular sinister here. Also of course the drop in Spain's ideal family size of about 9% is something to watch."

To sum up, it is not out of the realm of possibility that fertility rates in aging societies will rebound. Whether this will occur or not is to a large degree a function of social attitudes toward child-bearing. The trends noted in the study referenced above do not bode well for such a rebound.

Japan and the fertility trap-a worst case scenario?

The way I understand how a negative scenario for population dynamics could play out in Japan is as follows:

Japan has a large segment of its population that is approaching retirement. When all of those people retire, they expected to be supported by the working population which is now far too small to support the large number of retired persons. Of course, theoretically those retirees should have some significant savings since we've been informed for years that the Japanese are great savers. So the burden of supporting a large retired population with a small labor force might be delayed for a few years. On the other hand, the use of savings by the retirees forms a wave of dis-investment that could torpedo efforts to offset the shrinkage of the workforce with robotic or mechanized production(of which much has been made in the press).

Political and social division ensue. Leaving aside the options the Japanese government has for handling that situation, pretty soon thereafter members of that retired group start dying. In 2006, according to PRB.org's World Population Datasheet, there were 9 births for every 8 deaths in Japan. When the retirees start dying off, that ratio reverses and could go fairly high in the other direction, say 12 people dying for every 8 born. So massive population shrinkage ensues.

Since the population is shrinking, domestic demand naturally is shrinking as well, and therefore Japan becomes even more dependent on exports for positive GDP growth. In reality, once the ratio of births to deaths goes much below 1.0, positive GDP growth is not possible. The shrinkage in domestic demand will be too much for any increase in exports to overcome. And when the yen's value versus other currencies eventually rises to a realistic value, exports will drop off as well.

Since the population is shrinking, real estate prices decline steadily as well. So there could be a negative home equity effect on consumer spending.

Another major problem will be the large national debt built up which now will need to be covered by the output of a much smaller labor force. A default by Japan on its sovereign debt could occur.

Did I leave anything out?