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The Ageing of the New Zealand Population, 1881-2051 - WP 03/27

2  Historical and projected trends in age structure

Census data allow long-run trends in age structure to be measured with a reasonable degree of accuracy. Figure 1 presents these trends, along with results from Statistics New Zealand’s “preferred” projection series for the period 2001-2051 (Series 4). (Summaries of the data graphed in Figure 1 are given in Appendix Table 1.)

The most prominent feature of the historical and projected data is the increase in the proportion of the population in the older age groups at the expense of the proportion in the younger age groups—that is, population ageing. The downward trend in the share of the younger age groups was, nevertheless, reversed from the beginning of the baby boom in the 1940s to its peak in the 1960s. The proportion in the older age groups is set to increase sharply in coming decades as the baby boom cohorts reach their 60s.

Figure 1 – Historical and projected age structure for the New Zealand population
Historical and projected age structure for the New Zealand population
Source: 1881-1976 Census data cited in Bloomfield (Bloomfield 1984: II.5, II.6, II.23; 1981-2051 Census data and Series 4 projections accessed from Statistics New Zealand website www.stats.govt.nz on 8 July 2003.

Notes – Maori are excluded until 1951. However, the Maori population was only a few percent of the national population between 1881 and 1951, and the exclusion of Maori does not greatly affect the shape of the distribution. Results for 1931 were obtained by interpolating between the 1926 and 1936 Censuses; results for 1941 were obtained by interpolating between the 1936 and 1945 Censuses; and results for 1946 were obtained by interpolating between the 1945 and 1951 Censuses.

Is this change to an older age structure permanent, or just a transitory effect of the ageing of the baby boom cohorts? Long-term trends in age structure are driven by long-term trends in fertility and mortality rates, so the permanency of the age structure depends on the permanence of low fertility and mortality rates. Rises in either cannot be ruled out, but most researchers argue that low fertility and mortality are an integral part of “modern” economic and social life.

Changes in the age structure lead to changes in the balance between dependants and working-age people. Figure 2 shows three indices that attempt to measure changes in the balance. The youth dependency ratio is the population aged 0-14 divided by the population aged 15-64, and the old-age dependency ratio is the equivalent measure for the population aged 65 and over. The total dependency ratio is the sum of the young and old-age dependency ratios.

Youth dependency has fallen sharply since 1881, except during the baby boom, and is expected to continue falling. Old-age dependency has risen, and is expected to continue rising. The declines in youth dependency have been offset by rises in old-age dependency. The net effect has been that total dependency has fluctuated rather than showing a consistent trend upward or downwards. The average level for the total dependency ratio over the whole period 1881-2051 is 0.61. The current level is 0.52; under the projection shown, the total dependency ratio will not return to its average level until the early 2020s.

All three indices can be criticised. It can be argued, for instance, that a majority of people are now “dependent” until age 20, or even age 25, rather than age 15. There are also conceptual problems with simply adding together indices of youth dependency and old-age dependency, since the two types of dependency may have different economic and social implications. A response to these concerns is that all summary indices are necessarily imperfect and incomplete, but that some, including the three dependency ratios shown here, are nevertheless illuminating.

Figure 2 – Historical and projected dependency ratios
Historical and projected dependency ratios
Source: Calculated from the following data: 1881-1976 Census data cited in Bloomfield (Bloomfield 1984: II.5, II.6, II.23; 1981-2051 Census data and Series 4 projections accessed from Statistics New Zealand website www.stats.govt.nz on 8 July 2003.

Notes – The youth dependency ratio is the population aged 0-14 divided by the population aged 15-64; the old-age dependency ratio is the population aged 65 and over divided by the population aged 15-64; the total dependency ratio is the sum of the young and old-age dependency ratios.It is instructive to examine changes in summary measures of population structure.

It is also reassuring that alternative measures of dependency are highly correlated. One alternative measure is the “economic” dependency ratio, the population in the labour force divided by the population not in the labour force[1]. Figure 3 shows the total dependency ratio and ‘economic’ dependency ratio for the period 1881-2051. Though not identical, the two series clearly convey much the same message.

Figure 3 – Total and “economic” dependency ratios
Total and “economic” dependency ratios
Source: Population distribution calculated from the following data: 1881-1976 Census data cited in Bloomfield (Bloomfield 1984: II.5, II.6, II.23; 1981-2051 Census data and Series 4 projections accessed from Statistics New Zealand website www.stats.govt.nz on 8 July 2003. Age-specific labour force participation rates obtained from the Household Labour Force Survey, First Quarter 2003.

Note – The ‘economic’ dependency ratio is defined as the population in the labour force divided by the population not in the labour force, where the population in the labour force is calculated using fixed age-specific participation rates (in this case the rates for the first quarter of 2003), and changing proportions each age group.

Notes

  • [1]In these calculations, the population in the labour force is calculated using fixed age-sex-specific participation rates, and changing population distributions. Let ai be the labour force participation rate of age-sex group i (which is held fixed) and let pit be the proportion of the total population in age-sex group i in year t. The economic dependency ratio equals lt / (1-lt) where lt = Σaipit.
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