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Revising CEPII World Growth Projections to 2050: Focus on Education and Female Participation to the Labor Force

Compétitivité & Croissance 
Faits & Chiffres du 23 avril 2012
Par Agnès Bénassy-Quéré, Lionel Fontagné, Jean Fouré
In a previous post, the CEPII presented its World Growth Projections to 2050. This article focuses on two themes that were not addressed yet: Education and Female Participation to the Labor Force.
Education catch-up
There are great disparities between countries regarding educational level. For instance, the share of people with a secondary level diploma in 2010 ranges from 4% (in Mozambique) to 98% (in Russia and the USA) of the total working-age population. However, these discrepancies tend to shrink over time. Educational level has increased everywhere in the world from 1980 onwards, though at different paces (see Figure 1).
 
Figure 1 – Educational level in selected countries and zones, 1980-2050 (percentage of working-age population)

Notations: USA = United States; RUS = Russian Federation; JPN = Japan; EU27 = European Union; CHN = China; BRA = Brazil; IND = India and SSA = Sub-Saharan Africa.
Source: Barro & Lee (2010) for data, Fouré et al. (2012) for projections.
 
Regarding secondary education, leader countries almost have a 100% attainment rate since 2005. Developing countries tend to catch-up at a relatively low speed, except during two acceleration periods for Brazil (1990-2005) and China (since 1990). 

The highest level of tertiary education in the working-age population in 2010 is 56% in Russia. Differences accross countries are larger in terms of growth rates than for secondary education. 

In both cases, our projections use age-group-specific convergence speeds estimated at the broad regions level and therefore tend to extend the growth disparities over time, though the catch-up in levels occur.

Dynamics of female participation to the labour force
Education has several impacts on the macroeconomic projection. In addition to its contribution to TFP growth, we also consider its link to female participation to the labour force. Our findings are that two different effects compete. First, the more educated women are, the more they participate to the labor force market. Second, because of further education, their participation decreases for the youngest age groups (15-19 and 20-24) .
 
This relation results in contrasted evolution of female participation, as shown in Figure 2. Various profiles appear. For instance in China, female activity rate is already low for the two youngest age groups and high for the 25-45 age group. Increases in female participation then occur in the top age-groups. In India or Morocco, it is quite low and therefore the magnitude of changes is larger both for the studying and the labor participating age groups.
 
Figure 2 – Female Labor Force Participation Rate by age group, 1980, 2000, 2020 and 2050 (Percentage of population within age-group)

Source: International Labor Organization for data, Fouré et al. (2012) for projections.
 
Economically active population and its impact on GDP
These changes in female participation rates impact GDP mainly through the channel of the total labor force (displayed in Figure 3). Contrary to the EU, the United States keeps a dynamic active population. The three “giants” of developing countries compete over the projection period for the leading position in active population, with the Sub-Saharan African one being the more dynamic.
 
Figure 3 – Economically Active Population, 1980-2050 (million persons)

Notations: See Figure 1.
Source: International Labor Organization for data, Fouré et al. (2012) for projections.
 
The evolution of female participation between 2012 and 2050 leads to various changes in the projected GDP by 2050 (Figure 4). Three different country profiles appear. First, many benefit from the female activity increase (in particular Turkey (+14%) and Egypt, +11%). For other countries the contraction in female participation among the youngest age groups fails to be compensated by the increase in other groups. For developing countries, this may be due to the slow evolution of education (for instance Argentina or Ethiopia). In developed economies (Canada or Germany), this is because participation rates of women over 25 are already very high (80 to 85%) and cannot balance the increasing share of students.
 
Figure 4 – Change in 2050 GDP due to female participation rate changes

via chartsbin.com ChartsBin.com, http://chartsbin.com/view/5128.
Source: Fouré et al. (2012) and own calculations.
 

 
This text is an extract of “Databases” of the CEPII Newsletter N°49, 1st quarter 2012.
 
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