Category: France

France: The Demographic Reckoning

SAMI J. KARAM

Retirement demographics and immigration demographics are France’s two intractable challenges in this crisis.

There are many types of participants in the current French protests and riots: students, teachers, recent migrants, children of long-ago immigrants, members of the left and ultra-left, thugs and looters, populists and anti-elites etc. Telling the story through the motives of these protagonists is perfectly legitimate, even if they are not all working from the same playbook.

But there is another narrative overlaying all of these sub-plots, a backdrop that touches all of them and that brought the protests to a head. And that is the evolution of French demographics over the last half century. As these things go, the crisis blew up slowly, then suddenly.

Mass protests are frequent in France for cultural and historical reasons. That is, after all, the country that beheaded its king, and whose national motto includes the word Egalité. In the past ten years, there have been at least ten sizable waves of protests. To name only a few: in 2017, there was protest against labor rule changes; in 2018, protest by rail workers; in 2018-19, the Gilets Jaunes (yellow vests) against a new fuel tax; in 2019, climate-related protests; in 2019-20 and again in 2023, massive protests against pension reform; in 2025, protest against budget austerity; and now, protests for better education, alongside riots by troublemakers and “casseurs.”

Eugène Delacroix’s La Liberté guidant le peuple (Liberty leading the people), 1830.

The interesting thing, and topic of this post, is that the current student protests and the protests against pension reform of a few years ago run counter each other. In other words, the demands from today’s protesters are incompatible with the demands from protesters of years past.

Let me explain.

One of the key demands from today’s student protesters is an increase in funding for public education. But France is already spending on education at a rate that exceeds the OECD average, as shown in this chart. Only the Nordic countries, Belgium, Israel and the U.K. spend more, as a percent of GDP.

So, the real problem may not be the level of expenditures, but where the money is spent. The breakdown is shown in the next chart below. For every 100 euros spent by the French state on a teacher, that teacher’s take-home pay is only 38.6 euros, or about the same as the 38.4 euros pension contribution generated by that teacher.

To clarify, since the pension system is pay-as-you-go, this pension contribution is not set aside for the teacher in question; it is instead a contribution to the pension pool that is paid in the same year to already-retired teachers. One could say that this is an accounting feature and that pensions to retired teachers would be paid at the same level irrespective of the existence of this one current teacher. Nonetheless, the chart highlights the fact that the State is spending as much on retired teachers, or indeed more when you add all the components, as it is on current ones.

I am not trying to argue that the annual pension received by a retired teacher is too generous or not generous enough. That debate is beyond the scope of this post. My point instead is that a very large share of the education budget is allocated to pensions. There is, as a result, a crowding-out of the wages that are available to pay current teachers.

RETIREMENT DEMOGRAPHICS

The stress imposed by pension obligations comes from the usual two sources of demographic stress on any state’s finances nowadays, namely a lower supply of euros on one side and a higher demand for euros on the other side:

  • Supply of euros: There are in France (and in all Western economies) fewer workers per retiree because birth rates have collapsed since the end of the baby boom in the mid 1960s, as shown below with France’s total fertility rate (TFR). In 1960, the TFR was an average of 2.8 children per woman. Subsequently, the introduction of the contraceptive pill in 1967, the two oil crises of 1973 and 1979 and the legalization of abortion in 1975 all contributed to bring down the fertility rate to 1.8. Since then, it has been as high as 2.0 and as low as 1.6 where it stands today. Fewer children in the past fifty years means fewer workers today who are paying in the pay-as-you-go pension system, and therefore fewer euros.
  • Demand for euros: The retirement of baby boomers has created more demand for pensions. There are two factors in this equation: 1) the increased life expectancy of retirees, shown in the next chart, and 2) the sheer increase in the number of retirees, shown in the second chart below.

A retiree aged 65 in 1960 had about 14 more years of life ahead of him. In 1990, he had 18 more years. And today, he has 21 more years. Compared to 1960, today’s French retiree will cost the State 50% more euros (in real terms), because he will live 50% longer, all other things being equal.

This increase represents only the cost per retiree, but because there are far more retirees now than in 1960 (next chart), the pension burden on the State has exploded much higher. In 1960, there were 5 million French citizens aged 65 or older. In 2026, there are 15 million, going on 18 million by 2050.

So, the actual forward burden on the State is a lot more than a 50% increase since 1960. In terms of man-years of future obligations, annual pensions will have to support a doubling or tripling of annual payments in the next twenty-five years.

Another way to look at the supply-demand situation is the old-age dependency ratio, which is the ratio of people aged more than 64 to people aged 20 to 64 (x100 on the y-axis). It is the ratio of retirees to working people. In 1960, there were 2 retirees for every ten workers. Today, there are over 4 retirees for every 10 workers. The old-age dependency ratio has more than doubled since 1960 and will have nearly tripled by 2050.

IMMIGRATION DEMOGRAPHICS

There is another demographic component to this story. During the Trente Glorieuses, the ‘glorious thirty’ years of 1945-1975, France imported a large number of low-skilled workers because it needed to staff its factories while the economy was booming and French production was thriving. In recent years, France has again imported a large number of low-skilled workers, mostly for humanitarian reasons.

But the French economy is no longer growing at a fast rate and cannot as easily absorb and integrate the newcomers. It is beset by many problems including 1) a euro currency that is arguably too high for its industry, 2) Chinese imports that are hollowing out local manufacturing, 3) automation that requires fewer workers, and last but not least 4) a budgetary crisis that has driven up sovereign yields to their highest levels since 2002.

The protests come at a juncture when France has little maneuvering room. The fiscally conservative say that the country cannot make offers to the protesters without further damaging its finances and driving up government yields even higher, and that it cannot tax the wealthy without seeing more of them leave for friendlier jurisdictions. But the left says that both of these things should be done in order to redress rampant inequality, and that the sovereign debt can even be cancelled, or defaulted on.

This is a high stakes situation, brought about slowly at first, and then suddenly, by France’s demographic evolution in the past fifty years. For a long time, the State has lived beyond its means, as have many other rich countries (the U.S. included), and has borrowed from the future to meet the shortfall. But this configuration no longer works. At one end, there is a surplus of unneeded low-skilled workers, at the other, a rising numbers of pensioners. In the middle, the working-age population is declining in numbers (chart) and is employed in declining industries. To top it all, the government’s debt is growing to dangerous proportions.

SOLUTIONS

There are therefore three difficult challenges: 1) addressing the retirement equation and the balance between expenditures on the young vs old, 2) adopting a selective smart immigration approach to ensure integration and assimilation, and 3) re-energizing economic prospects for the working-age middle.

There are no easy fixes. France and most developed economies will likely have to raise their retirement age toward 70, except for those who are in manual labor jobs or who have physical impairments. The State will have to come up with new solutions to address the immigration issue. And France will need to adopt policies that are friendlier to wealth creators, entrepreneurs and investors.

P.S. The INSEE (Institut national de la statistique et des études économiques), France’s official statistics agency, expects the size of the working-age population to remain flat rather than decline because of small increases in the retirement age.

2022 French Elections with Axel Gyldén, 16 April 2022

Editors

Between the two rounds of the French Presidential election (last Sunday and next Sunday), Sami J. Karam speaks to Axel Gyldén, veteran reporter at France’s leading weekly L’Express. Topics include analysis of the first round results, President Emmanuel Macron’s popularity, Marine Le Pen’s probability of winning and what such a victory would mean for France and for Europe.

TO HEAR THE PODCAST, CLICK HERE OR ON THE TIMELINE BELOW:

Update: Working Age Population Around the World 1960-2050

SAMI J. KARAM

This is an update of a similar post from 2015. The UN projections have changed but only by small numbers. The main observations are the same as six years ago (click table to enlarge in a new tab).

The working age population (WAP, those aged 15 to 64) of sub-Saharan Africa continues to grow rapidly. It has more than doubled since 1990 from 252 million to 609 million, and is expected to more than double again by 2050 to 1.3 billion. If the reality turns out to be anywhere near these projections, it will be a significant challenge for African economies to absorb and to employ productively this enormous amount of new human energy.

India faces a similar challenge with its WAP growing from 928 million now to 1.1 billion in 2050. Though daunting, this represents a slowdown in the rate of growth from the previous thirty-year span 1990-2020.

The WAP of Europe, China and Japan have already peaked and will be declining for the rest of the century, per UN projections. Europe’s decline from near 500 million in 2005 to a projected 407 million by 2050 is mainly due to eastern and southern Europe. The WAP of France and the United Kingdom will flatline to 2050 while those of Germany and Russia decline.

In the United States, the steady growth in the WAP between 1960 and 2005 combined with a falling dependency ratio to fuel strong economic conditions. Growth in the WAP is expected to be more muted in the decades ahead.

Compared to the late 20th century and the first decades of this century, the future growth in the WAP will taper off or even turn negative in several regions and countries. Sub-Saharan Africa stands out as the exception that will maintain strong WAP momentum through at least 2050.

Lebanon in Crisis, with Joe Issa El Khoury

Editors

“Historically, Lebanon prospered as a result of inflows of people and funds – people who came to take refuge in Lebanon and also funds. If we look at the post World War 2 period when modern Lebanon became independent and also at previous periods that Lebanon went through – and I mean over the past 100 or 200 years – one thing that was common to all these eras is its liberal economic system that was adopted by all who lived on this land. The constant was the liberal economic system.”____ Joe Issa El Khoury

Sami J. Karam speaks with Joe Issa El Khoury, a Beirut-based financier, about the tragic events that have unfolded in Lebanon since 2019. A sharp fall in the currency, a banking freeze, a political crisis, hyperinflation, and widespread street protests made 2019 a difficult year. But these events were then compounded by the Covid-19 pandemic and the explosion in the port of Beirut in 2020.

Issa El Khoury explains the sequence of events that led to the present, and offers a possible way forward.

Topics include:

  • 0:00 Introduction of Joe Issa El Khoury
  • 2:25 What is it like right now on the ground in Beirut?
  • 8:33 Why did Lebanon have a golden period in 1945-75; why was it later so prone to crisis?
  • 17:40 The Rafik Hariri era and the return of growth 1990-2005
  • 20:00 What explains the weakness of the Lebanese state: geography and demographics
  • 26:30 Lebanon’s diversity as a source of wealth; Example of Lebanese cuisine
  • 30:40 Crossing the line from a laissez-faire economy to a crony economy
  • 35:05 The real estate boom of 2007-11
  • 36:55 The impact of the Syrian civil war
  • 39:10 Crowding out the private sector
  • 44:10 The proximate factors that led to the meltdown
  • 46:15 The current condition of the banking sector; Role of the Central Bank
  • 51:00 Will depositors suffer a haircut? The Lazard and other plans
  • 54:45 Talk of privatization of state assets
  • 59:45 Political patronage in the public sector
  • 1:01:50 “All roads lead to Washington DC and the acronym IMF”
  • 1:05:20 Political reform and the role of the diaspora

TO HEAR THE PODCAST, CLICK HERE OR ON THE TIMELINE BELOW:

A Few Certainties About Covid-19

Editors

There is plenty that we do not know about the coronavirus. But let us take stock of the things that we do know for sure, and of some other things that we will soon know.Screen Shot 2020-01-27 at 2.29.15 PM

Real-world Exponentiality

By now, a child understands exponential growth. If you start with one apple on March 1st and double every three days, you will have a thousand apples on March 31st and a million on April 30th.

But in the real world, not the abstract world of math, there are constraints on that growth. Doubling your apples every three days is feasible for a month or so because you can probably find a thousand apples and also find a place to store them. But it would be more difficult to find, transport and store a million apples, unless you are willing to pack a six car garage with apples from floor to ceiling (accurate math). If you did, most of them would rot and your neighbors would call for psychiatric help, two other constraints on unbridled exponentiality. Read more →

Soccer for Americans

Editors

Three rule changes to turn American soccer into a big money maker.

The experience of watching a soccer game rarely lives up to the anticipation. You go in hoping for a 4-3 cliff-hanger (as with Argentina vs. France recently) but too often you end up with 1-0 or worse, a draw, or much worse, a draw that is resolved through a penalty shootout. This chronic letdown explains why Americans prefer watching other sports.

soccer
Photo by Torsten Bolten.

Except for anxiety-ridden upper middle-class moms trying to steer their teenage sons away from (American) football practice, most Americans don’t really care about watching soccer. If this is changing, at about the pace of a glacier inching down an Alaskan ravine, it is mainly because the percentage of immigrants in the US population has been on the rise in recent decades. These immigrants or their parents often come from countries where soccer is the leading spectator sport. It follows then that with the current crackdown on immigration, the future of American soccer is looking as frail as ever. NFL bosses need not lose much sleep.
Read more →

The US Census Digs Deeper

Editors

Where were your ancestors from?

Over 45 million Americans identify their dominant ancestry as German and 22,000 identify theirs as Marshallese, from the Marshall Islands in the Pacific. But in the US Census proposed new form for 2020, both of these groups get their own box to check for the first time. In the previous 2010 form (shown below), German-Americans would simply check ‘White’ and Marshallese-Americans would check ‘Other Pacific Islander’.

screen-shot-2016-10-12-at-1-09-07-pm-2

In the 2020 form therefore, the US Census is seeking more disclosure and more granularity in the population data. This desire for more detail is not evenly spread however. The Marshallese, 0.01% of the US population, get as much real estate on the form as do German-Americans, 14% of the population. Germany being a country of many regions and Bundesländer, there would surely be more fragmentation in that 14% if anyone cared enough to know the percentage who claim for example Bavarian vs. Hessian ancestry. Read more →

Working Age Population Around the World 1960-2050

Editors

>>> This post was updated in May 2021. Visit this page for latest figures.

A fast growing economy usually requires a growing working-age population.  It is informative in this regard to look at the size of the working-age population (wap) for different regions and countries of the world.

Screen Shot 2015-09-25 at 1.05.48 PM

This data, compiled from the UN’s World Population Prospects – the 2015 Revision, tells us the following: Read more →

Europe: Aging Population Undermines Longer-Maturity Bonds

Editors

ANCHALEE WORRACHATE writes in Bloomberg News and highlights the adverse rise of the dependency ratio undermining European debt reduction efforts:

The euro-region’s ability to grow its way out of the debt crisis faces a roadblock — an aging population.

While Italian Prime Minister Mario Monti and his Spanish and French counterparts push for measures to spur an economic expansion, Italy’s structural dependency ratio exceeds 50 percent. In other words, the number of working-age people is less than half the total population. The government forecasts the ratio will reach 63 percent in 2030 and 83 percent by 2065.

Aging and shrinking labor pools are adding to budget woes in the region where the unemployment rate is already at a record high. The risk is that without an overhaul of benefit programs, governments will be unable to balance their books as tax revenues shrink and unfunded pension and health-care liabilities balloon. Longer-maturity bonds in Spain, Portugal and Greece are underperforming their shorter-dated counterparts amid concern the nations’ finances will keep deteriorating.

“You just can’t create growth out of thin air and the demographic trend in the euro zone isn’t conducive to growth,” said Humayun Shahryar, who helps oversee $100 million as chief executive officer at Auvest Capital Management Ltd. in Nicosia, Cyprus. “For a long time, the economic expansion in the region was fueled by low borrowing costs that came with the monetary union. That’s no longer the case and the shrinking working-age population is a problem.” READ MORE.

Demographic Megatrends of the 21st Century

Editors

The world’s changing demographics will have a far-reaching impact on our economy.

Context, as we know, can be very important in economics and in investing.  Some of the most successful investors of our time might have been unknown humble laborers if they had instead been born in a poor country far away or born in this country at a less propitious time. Context is made of several components including, among others, political risk, the rate of innovation, fiscal and monetary policy, and of course demographics.  Some or all of these components can remain unchanged for years or even decades, which may lead a majority of economists and investors to mistakenly view them as permanently fixed. Yet each inevitably comes to an inflection point which destabilizes economic or investment projections built on assumptions derived from the old paradigm.

In the case of demographics, they have acted for decades as sustained tailwinds for the US and global economies. The main drivers of these tailwinds were 1) the rise of the baby boomers and 2) the subsequent decline in the birth rate in North America, Asia and Europe, which resulted in a fall of the dependency ratio (number of dependents per working adult). Because these tailwinds have now largely died down (except in India and other parts of Asia), demographics can no longer be seen as a fixed component of the economic or investment context.  What was true for decades is no longer true because we have recently passed an inflection point in demographics.

Going forward, changes in the populations of North America, Europe, Asia and Sub-Saharan Africa will likely undermine economic projections derived from the habits and assumptions of an obsolete context.  Unlike the past few decades, demographics should now be considered as a moving variable which may be supportive or adverse to one’s economic or investment thesis. (In my view, every investment portfolio should be subjected to a ‘demographic audit’ which incorporates the impending changes).

Some demographic megatrends were quantified in 2010 by a United Nations report, World Population Prospects, and are summarized in the table below.  Forecasting is a difficult endeavor and the UN tries to mitigate the uncertainty by creating four different scenarios, or ‘variants’ of the Total Fertility Rate (TFR), for population projections: constant-fertility, high, medium and low. The constant-fertility variant assumes that the fertility rate (the number of children per woman) in each country and region of the world remains at the same level as it was in 2005-10.  This variant shows a shocking increase in the world population to levels which are probably unmanageable, from 7 billion today to 11 billion in 2050 to 27 billion in 2100.  It is highly unlikely therefore that fertility rates will remain unchanged. They are today exceedingly high in Sub-Saharan Africa and exceedingly low in Russia, Germany and Japan.  The three other variants all result in lower population counts for 2050 and 2100.  I use the medium variant below and all figures are UN estimates, not my own (for more detail on fertility assumptions of the four variants, see pages 27-35 of the UN report).

The key points are as follows:

The population in each of the more advanced economies of North America, Europe and Oceania will either grow slowly, stagnate or fall precipitously.  In the US and Canada, it will grow slowly. In a large majority of European countries, it will stagnate or shrink moderately. And in Russia, Japan and Italy, it will fall or fall precipitously.

Europe

Europe faces a significant demographic challenge.  It is in its causes and chronology similar to the challenge we face in the United States but it is more severe because Europe has a lower fertility rate. How do you keep the economy growing when the size of the population and its age distribution are no longer working in the direction of growth? It can be done but it is certainly more difficult. And how do you maintain Europe’s cherished social programs when the number of workers stagnates or declines and the number of retirees increases?

Europe’s population is expected to fall from 738 million in 2010, to 719m in 2050 to 675m in 2100. Because of some growth in Ireland, France and the United Kingdom, the population of Northern Europe would maintain itself or grow modestly. But it will decline in Southern Europe in large part because of Italy, Portugal and Serbia. On medium variant estimates, the number of Italians would shrink from 61m in 2010 to 59m in 2050 to 56m in 2100.  Germans would also be fewer, from 82m to 75m to 70m. Eastern Europe (including Russia) would shrink from 295m to 257m to 222m, with every state except the Czech Republic, Hungary and Slovakia losing 20 to 30% of its population count by 2100.

The UN report projects that, at constant-fertility rates, the population of Russia would fall from 142 million in 2010 to 114m in 2050 to 67m in 2100. The more probable medium variant predicts a Russian population of 126m in 2050 and 111m in 2100, still a decline of 31m by the end of the century. Russia suffers from a low fertility rate and a low life expectancy, two factors which are likely to improve in coming years.

Africa

Africa presents the opposite profile with the population of Sub-Saharan Africa continuing to grow rapidly.  In 2010, the fertility rate in Africa was 4.37 children per woman (5.43 in Nigeria) compared to 1.59 in Europe and 2.08 in the United States.  Although fertility rates are expected to fall dramatically, the population of Africa will first grow from 1.02 billion in 2010 to 2.19b in 2050 to 3.57b in 2100 (again, using the UN’s median variant). Of these numbers, Sub-Saharan Africa which has 856 million people today will total 1.96b and 3.36b. Given that the world population is expected to grow from 6.9 billion in 2010 to 9.3b in 2050 to 10.1b in 2100, it is easy to see that a huge part of this growth, 77%, will be coming from Sub-Saharan Africa.

If these numbers are surprising, consider that the world fertility rate stands today at 2.45 children per woman but that it is 4.78 in Sub-Saharan Africa.  And while the Sub-Saharan rate is expected to decline to 2.85 by 2050 and 2.14 by 2100, it will not decline fast enough to avert the incoming boom. Indeed, the numbers above already assume such a decline. A fall in the fertility rate usually follows an improvement in health care and a fall in the mortality rate. There is excellent news on this front. As recently reported by the Economist, “16 of the 20 African countries which have had detailed surveys of living conditions since 2005 reported falls in their child-mortality rates”.  The World Bank calls this “a tremendous success story that has only barely been recognised”.

China, India and Japan

China was the most populous nation in 2010 with 1.35 billion people but it will be overtaken by India around 2020 when both countries will have 1.39 billion. The impact of China’s one-child policy means that its population count will fade to 1.3b by 2050 and 952 million by 2100, while India continues to grow to 1.69b by 2050 before it also fades to 1.55b in 2100. The assumptions built into these numbers are not extreme. Starting at 1.56 in 2010 (well below the world average), China’s fertility rate would rise to 1.81 by 2050 and 2.01 by 2100.  India’s TFR now 2.54 (slightly higher than the world average) would fall to 1.84 by 2050 and tick up to 1.88 by 2100.

Like Europe, Japan’s population will fall by a large percentage.  Japan’s fertility rate of 1.42 was in 2010 one of the lowest in the world, but the UN is expecting it to recover to 2.04 by the end of the century. This will not be soon enough to avert a precipitous decline from 126m Japanese in 2010 to 109m in 2050 to 91m in 2100.

North America

The UN expects the population of North America to grow from 344 million in 2010 to 447m in 2050 to 526m in 2100 with nearly all of this growth taking place in the United States (respectively at 310m, 403m, 478m). My own estimate of the US population, published in America Heading for Zero Population Growth?, is lower.  Without new immigration, I found that the US population would not grow at all in the 2030s and 2040s.  The difference between my estimate and the UN estimate is of the order of 25 to 35 million Americans by 2050, which is significant for the US, but not so significant in the context of global demographics where the numbers are much larger.

On the Demographic Dividend

The demographic dividend is an economic benefit which can occur after mortality and fertility rates decline in a given country.  A decline in the mortality rate is generally followed by a decline in the fertility rate, as more women gain access to better health care and to some form of birth control. Over a period of decades, each adult and each working person will have fewer dependents to support. In the right context and with the right policies, this decline in the dependency ratio will yield a demographic dividend.  The best examples of the demographic dividend are found in East Asia, and in developed countries.  The demographic dividend in the US has largely been reaped and it now threatens to turn into a liability unless we enact the policies needed to deal with its aftermath. I wrote in Our Growing Inactive Population that the dependency ratio is about to reverse unless the retirement age is raised to 70 years.

In theory, Africa could be the next place to benefit from a demographic dividend. This would require not only a big decline in mortality and fertility rates, but also the adoption of government policies which foster political stability and encourage economic development. As to timing, it may be decades before the dividend appears, if at all. Outside of Africa, India could also reap a large demographic dividend.

Other Considerations

Outside of the sheer numbers which are startling enough, there are other considerations which flow from the age distributions and economic conditions in various countries.  The challenges posed by aging populations on developed economies and their government social programs are well known and documented.  It is enough to say that the status quo is untenable since it would lead inevitably to an explosion in government liabilities and to a severe deterioration of the economy. This statement applies easily to North America, Europe and Japan.

Less known are the demographic issues facing developing nations.  Nicholas Eberstadt of the American Enterprise Institute described them in a 2011 working paper:

On China:

“China is confronting the demographic version of “the perfect storm” and these new demographic realities may ultimately force us to revise today‘s received wisdom about “China‘s rise”.”

“China‘s future demographic profile will differ substantially from its current population situation, mainly because of the country‘s low levels of fertility. Although there are some inconsistencies and problems in official Chinese population data, population specialists believe that China became a sub-replacement fertility society about two decades ago—and that birth rates have fallen far below the replacement level since then.”

“In the decades immediately ahead, China will see the emergence of a growing host of essentially unmarriageable young men. This outcome will be the all but inescapable arithmetic consequence of the gender imbalance that has accompanied the country‘s “One Child Policy” – while ordinary human populations regularly and predictably report 103 to 105 baby boys for every 100 baby girls, China‘s officially reported sex ratio at birth (or SRB) was almost 120 boys for every 100 girls in 2005. This imbalance between the numbers of little boys and little girls in China sets the stage for a “marriage squeeze” of monumental proportions in the decades just ahead.”

In India, Eberstadt sees a significant North-South divide correlating the birth rate with education and economic opportunity:

“[India’s] dilemma can be highlighted by contrasting the prospective educational profiles of Kerala (which is now one of India‘s most prosperous states) and Bihar (one of its poorest). In just over a decade and a half, Kerala‘s working-age population will be on the brink of stagnation—but the state‘s working age manpower will be fairly well trained (roughly half of Keralites aged 15-64 would have high school education or better). By contrast, Bihar‘s working-age manpower will still be growing briskly—but as 2030 approaches, these projections suggest that well over half of working-age Biharis will have received no more than some primary schooling, and nearly a third of the state‘s working age manpower will have no formal education at all.”

Globally, Eberstadt sees a slowdown in the growth of the working-age population:

“By the reckoning of the UN Population Division, the world‘s population of “working age” (conventionally, albeit somewhat imperfectly, defined as men and women 15-64 years of age) grew by 1.3 billion, or about 40%, between 1990 and 2010: a pace averaging about 1.7% a year. Given the pronounced global fall-off in fertility over the recent past, however, the world‘s manpower of economically-active ages is set to grow much more slowly between now and the year 2030. By the Census Bureau‘s projections, the absolute increase in the world‘s working age population for 2010-2030 would be around 900 million—400 million fewer than over the past two decades—and the projected average rate of global manpower growth for the coming decades is 0.9% per annum—that is to say, only just over half the tempo for 1990-2010.”

Demographics are not the be all and end all of economics but they are one important factor among many important factors.  They open or close a window of opportunity. There is always a risk in extrapolating the present to predict the future and we should view these figures with some skepticism. However the trends outlined above are undeniable, even if their magnitude turns out to be greater or smaller than the figures suggest.