A method for socially evaluating the effects of long run demographic paths on living standards

Ross Guest, Griffith University
Nick Parr, Macquarie University

The paper proposes a new simulation method for evaluating he very long run social value of certain demographic paths, and the effects of changes in mortality, immigration, fertility, labour force participation, consumption needs by age, and intergenerational value judgements. Each of these values is separated into a component based on the asymptotic stable populations and component based on the transition paths towards these stable populations. The application to Australia shows the considerable social cost of prospective improvements in mortality and considerable gains from higher immigration and increased participation. The effect of fertility however is very sensitive to assumptions about the age-specific consumption needs of the population and social value judgements about intergenerational equity. The paper is motivated by the need to better inform the formulation of sustainable population-related policies, giving due consideration to both their more immediate and their very long run implications.