Even though South Korea faces a much larger dependency burden than India: its old-age dependency ratio will rise from 15 to 61 in 2010-2050, whereas India’s grows from 8 to 20. But it should be in a better position to bear it…
The annual Human Development Report of the UN Development Programme usually matters because it provides a broader measure of development than the ones based on gross domestic product (GDP). But this year’s report is notable for different reason: it contains the first appearance in the non-academic literature of an influential body of research conducted over many years by Wolfgang Lutz of the International Institute for Applied Systems Analysis (IIASA) near Vienna. This concerns the implications of educational attainment for the demography. The central idea is that educational attainment matters for the demographic dividend (the potential benefits countries get when they get lots of young working adults as a share of their total population); that high educational standards moderate the negative impact of ageing and low ones blunt the potentially beneficial results of the dividend.
In a recent book, “Whither the Child?” (Paradigm Press,) Mr. Lutz and two co-authors argue that if you take improving educational standards properly into account, the optimum fertility rate is lower than the replacement rate 1.8 not 2.1. This happens because, they say, education is expensive (hence having slightly fewer children is rational) and also because better-educated people earn more and can therefore support more children and retired people through their labour. The Human Development report takes a slightly different approach to make a similar point.
South Korea has one of the most rapidly ageing societies in the world. The population will peak soon after 2020 and start to decline in about 2030. South Koreaspent its demographic dividend in 1980-2000. In contrast, India’s population will still be growing even in 2050, one of the relatively few Asian countries where this will be happening. It is just beginning to get the dividend from having an expanding working-age population.
But these raw numbers do not take account of the educational attainments of the two countries. South Korea’s population will be falling after 2030, yes. But because it has invested a lot in schools universities, and because of the high social value placed upon education, the number and especially the share of people with secondary and tertiary education will continue to
expand, even while overall numbers fall. By 2050, well over a third of
the population will have university degrees. India will not reach this point until well after 2050. Even though its university sector is growing, the share of the population with degrees remains small. The share of the population with primary education only will be larger in 2050 than it is now, whereas in South Korea, the share almost disappears in 2050.
The significance of this is, of course, that people with higher degrees are also likely to be more productive, and hence should be able to look after more dependents than those with just a primary-school education. So even though South Korea faces a much larger dependency burden than India: its old-age dependency ratio will rise from 15 to 61 in 2010-2050, whereas India’s grows from 8 to 20. But it should be in a better position to bear it.
– The Economist