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Join the club CONVERGENCE IN POPULATION AGEING ACROSS EUROPEAN NUTS-2 REGIONS ILYA KASHNITSKY * , JOOP DE BEER , LEO VAN WISSEN, NICOLE VAN DER GAAG RSA Annual Conference 2016-04-05 * Corresponding author: kashnitsky@nidi.nl WHY CONVERGENCE IN

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Join the club

CONVERGENCE IN POPULATION AGEING ACROSS EUROPEAN NUTS-2 REGIONS

ILYA KASHNITSKY *, JOOP DE BEER , LEO VAN WISSEN, NICOLE VAN DER GAAG RSA Annual Conference 2016-04-05 * Corresponding author: kashnitsky@nidi.nl

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SLIDE 2

WHY CONVERGENCE IN AGEING?

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SLIDE 3

WHY CONVERGENCE IN AGEING?

Cohesion Policy (success story ?)

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SLIDE 4

WHY CONVERGENCE IN AGEING?

Cohesion Policy (success story ?) Population ageing, a big challenge

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SLIDE 5

WHY CONVERGENCE IN AGEING?

Note: lines are weighted averages of country level UN data by EuroVoc subregions; countries are weighted by the number of NUTS-2 regions

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SLIDE 6

WHY CONVERGENCE IN AGEING?

Cohesion Policy (success story ?) Population ageing, a big challenge Ageing has a downwards effect on economic

  • utput
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SLIDE 7

WHY CONVERGENCE IN AGEING?

Cohesion Policy (success story ?) Population ageing, a big challenge Ageing has a downwards effect on economic

  • utput

To what extent convergence in income can be explained with convergence in ageing?

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SLIDE 8

DATA & METHODS

European Union 27, 261 NUTS-2 regions Population data: Eurostat, self harmonized Economic data (GDP): Cambridge Regional Database

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SLIDE 9

DATA & METHODS

European Union 27, 261 NUTS-2 regions Population data: Eurostat, self harmonized Economic data (GDP): Cambridge Regional Database Measure variable for ageing: share of working-age population (15-64/total)

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SLIDE 10

DATA & METHODS

European Union 27, 261 NUTS-2 regions Population data: Eurostat, self harmonized Economic data (GDP): Cambridge Regional Database Measure variable for ageing: share of working-age population (15-64/total) Sigma-convergence VS beta-convergence

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SLIDE 11

SIGMA-CONVERGENCE VS BETA-CONVERGENCE

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SIGMA DIVERGENCE

2003 2013

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SLIDE 13

BETA CONVERGENCE

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BETA CONVERGENCE

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BETA CONVERGENCE

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CONVERGENCE IN AGEING

beta sigma

CV of the share of working- age population increased from 3.38% to 3.79%, an increase of 12.2%

Europe, global Europe, conditional (Intercept) 1.06 (0.04)*** 1.20 (0.04)*** Initial WR

  • 0.11 (0.06)
  • 0.32 (0.06)***

Western (ref) NA Eastern 0.02 (0.00)*** Northern

  • 0.01 (0.00)

Southern

  • 0.01 (0.00)

R2 0.01 0.18

  • Adj. R2

0.01 0.17

  • Num. obs.

261 261 RMSE 0.02 0.02

***p < 0.001, **p < 0.01, *p < 0.05;

standard errors in parenthesis

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SLIDE 17

CONVERGENCE IN GDP PER CAPITA

Europe, global Europe, conditional (Intercept) 1.29 (0.02)*** 1.18 (0.03)*** Initial WR

  • 0.08 (0.01)***
  • 0.03 (0.01)***

Western (ref) NA Eastern 0.21 (0.03)*** Northern 0.06 (0.03)* Southern

  • 0.15 (0.02)***

R2 0.23 0.58

  • Adj. R2

0.23 0.58

  • Num. obs.

261 261 RMSE 0.16 0.12

***p < 0.001, **p < 0.01, *p < 0.05;

standard errors in parenthesis

beta sigma

CV of GDP per capita reduced from 51.64 to 50.69, a decrease of 1.84%

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SLIDE 18

CORRELATION: INCOME AND AGEING

Europe, global Europe, conditional (Intercept)

  • 1.34 (0.50)**

0.34 (0.36) Initial WR 2.49 (0.51)*** 0.76 (0.37)* Western (ref) NA Eastern 0.28 (0.02)*** Northern 0.06 (0.03)* Southern

  • 0.12 (0.02)***

R2 0.09 0.57

  • Adj. R2

0.08 0.56

  • Num. obs.

261 261 RMSE 0.17 0.12

***p < 0.001, **p < 0.01, *p < 0.05;

standard errors in parenthesis

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SLIDE 19

CORRELATION: INCOME AND AGEING

There is a positive correlation between growth in GDP per capita and growth the share of working-age population

Europe, global Europe, conditional (Intercept)

  • 1.34 (0.50)**

0.34 (0.36) Initial WR 2.49 (0.51)*** 0.76 (0.37)* Western (ref) NA Eastern 0.28 (0.02)*** Northern 0.06 (0.03)* Southern

  • 0.12 (0.02)***

R2 0.09 0.57

  • Adj. R2

0.08 0.56

  • Num. obs.

261 261 RMSE 0.17 0.12

***p < 0.001, **p < 0.01, *p < 0.05;

standard errors in parenthesis

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SLIDE 20

CORRELATION: INCOME AND AGEING

There is a positive correlation between growth in GDP per capita and growth the share of working-age population There are big differences between subregions: the dummies explain half of the variance in GDP per capita growth

Europe, global Europe, conditional (Intercept)

  • 1.34 (0.50)**

0.34 (0.36) Initial WR 2.49 (0.51)*** 0.76 (0.37)* Western (ref) NA Eastern 0.28 (0.02)*** Northern 0.06 (0.03)* Southern

  • 0.12 (0.02)***

R2 0.09 0.57

  • Adj. R2

0.08 0.56

  • Num. obs.

261 261 RMSE 0.17 0.12

***p < 0.001, **p < 0.01, *p < 0.05;

standard errors in parenthesis

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EFFECT OF AGEING ON INCOME CONVERGENCE

𝐻𝐸𝑄2 𝑄2 𝐻𝐸𝑄1 𝑄1

=

𝐻𝐸𝑄2 𝑋2 𝐻𝐸𝑄1 𝑋1

x

𝑋2 𝑄2 𝑋1 𝑄1

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EFFECT OF AGEING ON INCOME CONVERGENCE

𝐻𝐸𝑄2 𝑄2 𝐻𝐸𝑄1 𝑄1

=

𝐻𝐸𝑄2 𝑋2 𝐻𝐸𝑄1 𝑋1

x

𝑋2 𝑄2 𝑋1 𝑄1

GDP growth productivity population structure

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SLIDE 23

EFFECT OF AGEING ON INCOME CONVERGENCE

𝐻𝐸𝑄2 𝑄2 𝐻𝐸𝑄1 𝑄1

=

𝐻𝐸𝑄2 𝑋2 𝐻𝐸𝑄1 𝑋1

x

𝑋2 𝑄2 𝑋1 𝑄1

GDP growth productivity population structure

𝐻𝐸𝑄1 𝑄1 x

𝐻𝐸𝑄2 𝑋2 𝐻𝐸𝑄1 𝑋1

x

𝑋2 𝑄2 𝑋1 𝑄1

= 𝐻𝐸𝑄2 𝑄2

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EFFECT OF AGEING ON INCOME CONVERGENCE

51.64 (1)

𝐻𝐸𝑄

1 𝑄 1

x

𝐻𝐸𝑄2 𝑋

2

𝐻𝐸𝑄1 𝑋

1

x

𝑋

2 𝑄2

𝑋

1 𝑄1

= 𝐻𝐸𝑄2 𝑄2

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EFFECT OF AGEING ON INCOME CONVERGENCE

51.64 (1) Real

  • 50.38

(2)

𝐻𝐸𝑄

1 𝑄 1

x

𝐻𝐸𝑄2 𝑋

2

𝐻𝐸𝑄1 𝑋

1

x

𝑋

2 𝑄2

𝑋

1 𝑄1

= 𝐻𝐸𝑄2 𝑄2

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EFFECT OF AGEING ON INCOME CONVERGENCE

51.64 (1) Real

  • 50.38

(2) Real Real 50.69 (3)

𝐻𝐸𝑄

1 𝑄 1

x

𝐻𝐸𝑄2 𝑋

2

𝐻𝐸𝑄1 𝑋

1

x

𝑋

2 𝑄2

𝑋

1 𝑄1

= 𝐻𝐸𝑄2 𝑄2 Divergence in ageing (real) reduces income convergence by 24.4%

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EFFECT OF AGEING ON INCOME CONVERGENCE

51.64 (1) Real

  • 50.38

(2) Real Real 50.69 (3) Real Fit 50.03 (4)

𝐻𝐸𝑄

1 𝑄 1

x

𝐻𝐸𝑄2 𝑋

2

𝐻𝐸𝑄1 𝑋

1

x

𝑋

2 𝑄2

𝑋

1 𝑄1

= 𝐻𝐸𝑄2 𝑄2 Divergence in ageing (real) reduces income convergence by 24.4%

Convergence in ageing (beta-convergence model fit) increases income convergence by 28.4%

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CONCLUSIONS

Convergence in ageing: sigma divergence; weak beta convergence; club convergence

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CONCLUSIONS

Convergence in ageing: sigma divergence; weak beta convergence; club convergence Convergence in income: sigma convergence; moderate beta convergence; club convergence

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SLIDE 30

CONCLUSIONS

Convergence in ageing: sigma divergence; weak beta convergence; club convergence Convergence in income: sigma convergence; moderate beta convergence; club convergence Convergence in ageing is positively related with convergence in income

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CONCLUSIONS

Convergence in ageing: sigma divergence; weak beta convergence; club convergence Convergence in income: sigma convergence; moderate beta convergence; club convergence Convergence in ageing is positively related with convergence in income Changes in the share of working-age population account for 8.5% of regional income growth

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CONCLUSIONS

Convergence in ageing: sigma divergence; weak beta convergence; club convergence Convergence in income: sigma convergence; moderate beta convergence; club convergence Convergence in ageing is positively related with convergence in income Changes in the share of working-age population account for 8.5% of regional income growth In the coming decades, the he effect of population dynamics on income convergence will increase as the result of the acceleration of population ageing

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NIDI is an institute of the Royal Netherlands Academy of Arts and Sciences KNAW and is affliated to the University of Groningen www.nidi.nl

thank you

ILYA KASHNITSKY (kashnitsky@nidi.nl) JOOP DE BEER LEO VAN WISSEN NICOLE VAN DER GAAG