Microsimulation approach in fertility projections

Paweł Strzelecki

Warsaw School of Economics

GRAPE internal seminar 2015.10.23

Group for Research in Applied Economics

Outline

1. Fertility assumptions in classical population projections

2. Microsimulation and agent based models

3. Application of microsimulation in the project: AGEING „Fiscal and welfare effects of changes in fertility and health in an aging society –

insights from OLG modelling”

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1.1 Idea of ASFR

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Sum below this figure – Total Fertility Rate (TFR)

ASFR(x)=𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐ℎ𝑖𝑙𝑑𝑒𝑛 𝑏𝑜𝑟𝑛 𝑡𝑜 𝑤𝑜𝑚𝑒𝑛 𝑎𝑔𝑒𝑑 𝑥

𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑚𝑒𝑛 𝑎𝑔𝑒𝑑 𝑥

Method of calculation:

Interpretation:

Expected value of the number of children

born to women aged x in one year

1.2 Cohort-component method

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Population by age and sex - vector

Leslie matrix - fertility and mortality rates widely used in demography transformed to elements of one matrix

Population projection:

requires assumptions about fertility and mortality rates in the future

and at least net migration by age

1.3 ASFRs – projections in practice

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TFR – comparison of projections ASFR in AWG2015*

*2005 – historical data

1.3 Pros and cons of using ASFRs

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DISADVANTAGES

- difficulties with including most

micro research on determinants of fertility decisions

- births as independent events?

- difficulties in convincing explanation of the drivers of future changes

ADVANTAGES - apply traditional demographic

indicators

- used in most population projections (base on full population)

- easy to interpret and prepare

mechanical assumptions

2.1 Microsimulation and ABM - idea

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PROJECTION: Year 2017

PROJECTION: Year 2016

Initial sample: Year 2015

Person

No.Gender Alive? Age No of children

Labour

market

status

Educational

attainment

Wage in relation to average

in the economy

1 F 1 18 0 Inactive Secondary gen 0.000

2 F 1 32 1 Employed Basic voc 0.785

3 M 1 46 0 Emplyed Tertiary 1.110

4 F 1 84 2 Inactive Basic 0.000

5 M 1 25 0 Unamployed Basic Voc 0.000

6 F 1 36 2 Inactive Tertiary 0.000

7 M 1 45 0 Employed

8 F 1 46 0

Unit

s (p

erso

ns)

Features of persons

ABM (Agent Based Models) – approach based on theoretically defined rules of behavior of units: not necessary rational agent and optimization, possible inclusion of networks, diffusion of attitudes etc.

Population projection as transformations of the database about persons:

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2.2 Example: determinants of LFPRs of women

Decomposition of the changes of LFPRs in the periond 2010-2060

Source: own simulations base on AWG data and projections

Age

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2.2 Example: determinants of LFPRs of women

Decomposition of the changes of LFPRs in the periond 2010-2060

Source: Own simulations, AWG assumptions and projections

Changes 2020-2010 Changes 2060-2010

2.3 Microsimulation approach – pros and cons

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DISADVANTAGES - black box problem:

interpretation of changes can be difficult if too many parameters can change

- potential problems with communication of the results

- based on the sample not

population – necessary adjustments to be consistent with published data

- requires much more time to simulate population

ADVANTAGES - natural application of empirical

studies based on microdata

- almost unlimited ways of extending the set of determinants, rules of behavior, types of models

- automatic interpretation of the

simulation scenarios

3.1 Application to AGEING project

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Aim of microsimulation – preparing fertility scenarios in the form of ASFRs but with reliable interpretation based on empirical research

Idea in the OLG model: differences in behavior of households with different number of children

Microsimulation should include the number of children

but also factors influencing fertility.

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Empirical studies (1) – Vitali et al. (2009)

Vitali a., Billari F., Prskawetz A., Testa M., 2009. Preference Theory and Low Fertility: A Comparative Perspective, European Journal of Population, Vol. 25, No. 4, pp. 413-438

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Empirical studies (2) – Kotowska et al. (2008)

Kotowska, Jóźwiak, Matysiak, Baranowska (2008) Fertility decline as a response to profound sociatal and labour market changes, Demographic Research, Vol. 19, No. 22, pp. 795-854

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Empirical studies (3) – Frejka et al. (2009)

Frejka T., Sobotka T., Hoem J., Toulemon L., 2008, Childbearing Trends and Policies in Europe, Max Planck Institute for Demographic Research,

Source: Frejka et al.(2008)

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Empirical studies (4) –Strzelecki (2009)

Strzelecki P., 2009, The multi-state projection of Poland's population by educational attainment for the years 2003-2030, Studia Demograficzne, 152/2, pp. 23-44

Source: Strzelecki(2009)

Thank you for your attention!