Methodology used in preparing the estimates and projections of the urban and rural population and the economically active population

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1 CEPAL América Latina y el Caribe. Observatorio demográfico Nº 2 Población económicamente activa Methodology used in preparing the estimates and projections of the urban and rural population and the economically active population Introduction Population projections are a necessary input for economic and social development plans from two points of view: the population as producer (labour force) and as consumer of goods and services. It is vital for countries to have national projections by sex and age groups. These are important not only in their own right but also as the basis for deriving a series of more disaggregated projections which provide useful information for regional planning and specify with further detail the future basic needs (notably for health, housing and education), as well as the probable future labour supply. The present document describes the methodologies used most recently by the Latin American and Caribbean Demographic Centre (CELADE) Population Division of ECLAC to project the urban and rural population and the economically active urban and rural population by sex and age group. These methodologies are basically very simple, flexible and rapid to obtain. The scant, and at times unsatisfactory, information available for developing countries acts as a constraint on the application of more sophisticated methodologies. Moreover, in this particular case, practical procedures were required in order to produce almost simultaneous projections for a large number of countries and at the same time to ensure consistency in the results. I. Methodology for projections on the urban and rural population by sex and age group General description This section describes the procedure used by CELADE to prepare projections for the urban and rural population by sex and five-year age group for the 20 countries of Latin America that were presented in Demographic Bulletin No. 76, July These projections cover the period and yield results for quinquennial periods. For each country, the urban population corresponds to the definition used in the population censuses. Since the definitions used are based on different criteria (in some cases, only quantitative cases, in others, only qualitative and, in several, a combination of the two), there are limitations in terms of the comparability of figures between the different countries or between censuses and these should be borne in mind in interpreting the results. Nevertheless, whatever the criteria used to define the urban population, there is an undeniably strong trend towards concentration of the population with many serious social, economic and demographic implications for planning and policy-making. It should be noted that the corresponding projections were based on logistical models that describe the probable trend in the percentage of the urban population by sex. Historically, four categories of countries were distinguished in the region, based on past urban percentages 197

2 ECLAC Latin America and the Caribbean. Demographic Observatory No. 2 Economically active population and on national socio-economic characteristics. In the light of this classification, two points of reference were considered: (i) a lower theoretical urbanization limit than that observed in the past lower asymptote which is located in a distant past, and (ii) a maximum theoretical limit higher asymptote towards which the percentage of the urban population tends. With the availability of census data from the 1980, 1990 and 2000 rounds, changes have been introduced in the initial methodology and the information from two censuses have, to the extent possible, been adopted as pivots. Hypotheses on the possible trends in the economic and social development process of each country and of the four categories identified were taken into account, first, in order to determine urban percentages considered as pivots and, second, in order to determine the theoretical limits. In each case, however, the census definition of urban population was respected, which undoubtedly poses restrictions in terms of the application of the method used. Lastly, the rural population was obtained as the difference between total population (based on the 2006 revised CELADE projections) and the urban population resulting from the projection of the percentage every five years between 1970 and Use of the logistical function As indicated earlier, the projection of the total, urban and rural population from 1970 to 2050 was based on the projection of percentages of the urban population for each sex separately. The urban population was obtained by applying these percentages to the projections of the total population by sex based on the components method. The rural population was calculated as the difference between the total population and the urban population. The logistical function was proposed by the United Nations for projecting urbanization rates. This method (United Nations, 1975) implies a constant difference between urban and rural growth rates, which implies a logistical urban population rate trend with a lower asymptote of 0 and a higher asymptote of 100. The application of this technique across the board to all the countries in the region presented a few problems: (i) Many countries, in particular those that have a high rate of urbanization from the outset, had very high urban population rates (close to 100%) at the end of the period. (ii) In some countries with low urbanization levels, the percentage of the urban population increased at an excessively high rate, owing to the rate of urban growth observed between the last two censuses. This growth rate may be affected by the differences in definitions, due to lack of comparability of the quality of censuses or to cyclical factors. For this reason it was decided that the projection should be based on a different procedure. A logistical behaviour of the following type was adopted: % U t = K e a+bt where % U t = rate of urbanization at time t K 1 = lower asymptote K 1 + K 2 = higher asymptote a, b = parameters t = time In order to set the asymptotes, the countries of the region were divided into four types, based on historical experience, the current level of urbanization and factors linked to the economic and social development of each country. Tables A and B show the configuration of the groups and the asymptotes adopted. Given that the values of K 1 and K 2 are known, the urban rate at two different times must be known in order to determine the values of the two remaining parameters. To this end, the rate of urbanization in two successive censuses was considered; in other words, the values were taken as pivots. This procedure cannot replace more refined techniques (such as the components method) which take into consideration possible changes in urban and rural fertility and mortality rates, as well as migration flows, but it has the advantage of being simpler and more rapid, especially as the lack of information in many countries rules out the application of more sophisticated procedures. In the short term (10 years), whatever the path chosen, the results do not vary significantly. Even so, in all cases where the necessary information is available and whenever it is possible to collaborate with national statistical or planning offices, it is preferable to generate these projections by components, as shown in the case of Peru. Urban and rural population by age group So far, a method of projecting the total urban population has been proposed for each sex in order to obtain the total urban population, which is then deducted from total population to obtain the rural population. The steps for obtaining the corresponding projection for the population by quinquennial age groups are described below. The first step is to work out the urban population by sex and age group for the historical period, which, in the K 2 198

3 CEPAL América Latina y el Caribe. Observatorio demográfico Nº 2 Población económicamente activa Table A LATIN AMERICA: ASYMPTOTES AND PIVOTS USED IN PROJECTING THE PERCENTAGE OF THE URBAN POPULATION, BY COUNTRY (Males) Asymptotes Pivot 1 Pivot 2 Country Lower Upper Year Value Year Value Argentina Chile Venezuela (Bolivarian Republic of) Uruguay Brazil Colombia Cuba Mexico Peru a Bolivia Costa Rica Ecuador El Salvador Guatemala Honduras Nicaragua Panama Paraguay Dominican Republic Haiti a Projection by component. Table B LATIN AMERICA: ASYMPTOTES AND PIVOTS USED IN PROJECTING THE PERCENTAGE OF THE URBAN POPULATION, BY COUNTRY (Females) Asymptotes Pivot 1 Pivot 2 Country Lower Upper Year Value Year Value Argentina Chile Venezuela (Bolivarian Republic of) Uruguay Brazil Colombia Cuba Mexico Peru a Bolivia Costa Rica Ecuador El Salvador Guatemala Honduras Nicaragua Panama Paraguay Dominican Republic Haiti a Projection by component. case of CELADE projections corresponds to the years between 1970 and the date of the most recent census for which data are available. For this purpose, the following information is required: (i) total population of the country by sex and age group, adjusted for the historical period, and (ii) percentages of the urban population by sex and age group for the years of the censuses considered in the study. Once the percentages of the urban population have been obtained, this information must be assessed and, where necessary, adjusted. This was done using a graphical procedure and in applying the adjusted percentages to 199

4 ECLAC Latin America and the Caribbean. Demographic Observatory No. 2 Economically active population the adjusted total population, every effort was made to ensure that the percentage of the total urban population by sex did not differ from the percentage in the original source. Once a series of urban percentages by sex and age group had been obtained, linear interpolation between these values was used to obtain the percentages corresponding to the years ending in 0 and 5. The projection by age group must also follow a logistical pattern and reproduce the total urban percentage already projected, and for this purpose the United Nations method was used as shown below: The total urban and rural population projection is used to determine average annual growth rates of the urban and rural population and therefore the difference between the two: d = r u - r R For each age group, the projected urban percentage (at time t) is calculated using the following formula: % U (t) = % U (o) 100ed t 100 % U (o) (1 e d t ) Next, the populations projected for each age group are added and, if there is any difference between this total and the total population as previously calculated (it has always been very small), these are prorated as appropriate. This procedure is then repeated for the projections relating to each five-year period. II. Projections for the economically active population by country, urban and rural areas, by sex and age The CELADE projections for the economically active population (EAP) presented here were prepared by sex and five-year age group for urban and rural areas and cover the period in five-year brackets. For each country, the definition for economically active population is that used in population censuses, household surveys or both. Adjustment of the initial population The base year chosen for the projection is the year of the most recent census or survey considered, in most cases, the year The estimated activity rates by quinquennial age group by sex and urban and rural areas were obtained through a graphical adjustment of data from existing sources. The rates corresponding to the years of the historical period ending in 0 and 5 were obtained through linear interpolation of the above-mentioned rates. The minimum age used in the definition of the economically active population varies from one country to another. However, in the cases where this age is below 15 years, this information was discarded and the lower age limit of 15 years was used. The cut-off point at 15 years ensures greater homogeneity of the information obtained. Projection of the economically active population As already indicated, EAP projections are prepared by sex, age and urban and rural areas. The methodology used varied depending on the subset of the population studied. A brief description is given below of the procedures followed in each case for the projection of activity rates. Not all countries in the region take account of economic participation from age 10; in order to obtain greater homogeneity of information and make comparisons between countries, it was therefore decided to change the lower age limit for analysis of labour participation to 15 years and leave the analysis of labour participation of under-fifteens to more specific studies. The most outstanding feature of the 1990s which affects to some extent the review of current estimates and assumptions for the future is the higher than expected increase in female labour participation rates. This phenomenon could be related to the crisis and the structural adjustment that affected most countries in the region and which would have obliged traditionally inactive household members to enter the labour market in order to boost family income. Nevertheless, the entry of the female population into the labour market as part of the change of the role of women in society cannot be ignored. 200

5 CEPAL América Latina y el Caribe. Observatorio demográfico Nº 2 Población económicamente activa Since the procedure is based on projections of activity rates by urban and rural areas, the problem posed by internal migration is obviated, since the prerequisite is a projection of the population by area of residence. Fortunately, most countries publish information on the economically active population in both urban and rural areas. The procedure used to project activity rates consists in interpolating the rates per age at the start of the projection and the model rates at a given time; the initial assumption was that countries would achieve model rates in However, by analysing changes in rural female participation rates, a different date was chosen: the year 2080, bearing in mind that women s participation in economic activity has been slower in rural areas than in urban areas. Next, the economically active population was calculated by multiplying the rates obtained in years ending in 0 and 5 by the figure corresponding to the relevant population. Rates based on the original version of the procedure were used as model rates of the male population, both urban and rural: 1 model 1 (industrialized countries), model 2 (semi-industrialized countries) and model 3 (an average was added to cover the range of possibilities observed in Latin American countries) ( tables C and D). The models used in each country, which in several cases may be combinations of models (for some age brackets) are described below. The models are based on the assumption that a higher percentage of the young population will remain in the educational system. Consequently, the labour participation rates of the population under 20 years of age should fall. The same should occur with labour participation rates of the population over 65, since, in this case, it is estimated that there is greater access to retirement benefits, compared with the participation of the population aged 20 to 65, when activity levels are expected to be at their peak. The urban population rates are projected linearly towards the models in table C, while rural population rates are projected linearly towards the models in table D. The models for projecting male participation are chosen and subsequently, the same models are adopted for the female population. In view of the sharp increase in women s participation in economic activity observed in most countries in the 1990s, it was necessary to change the procedure since the scale of this phenomenon had not been foreseen when the original version of the procedure was being designed. In order to construct new models for projecting female participation rates, an analysis was done of the participation levels observed in developed countries, including the Latin European countries and the Latin American countries that exhibit high female activity rates. This analysis was then used to construct models that remained in application up to the earlier revision of estimates and projections of the economically active population. However, more recent information led to the adoption of a trend towards greater equality in male and female participation. This validates the need for the proposed modification of the procedure. In each source studied, the definitions of the economically active population adopted in the relevant country were used. Thus, in comparing different countries, it must be borne in mind that there are varying definitions involved. In addition, differences may also be found within each country depending on the date or source. Differences in the definition or sources used may affect the estimate of the economically active female population. This means that caution should be exercised in analysing historical data on the growth of the economically active population; indeed, while they point to trends that do reflect reality, they can be affected by different yardsticks or by improvements over time in the compilation of statistics on labour participation. The available sources of data used for each country are identified below with indications as to which have been used in the estimates and models or other modification incorporated in the projection of rates. Table C LIMIT MODEL OF ACTIVITY RATES OF THE URBAN POPULATION BY AGE (Per cent) Activity rates Age Model 1 Model 2 Model 3 a and over a Average of models 1 and 2. 1 Guiomar Bay, Una revisión de la metodología de estimación y proyección de la población económicamente activa, Santiago, Chile, Latin American and Caribbean Demographic Centre (CELADE) - Population Division of ECLAC, unpublished. 201

6 ECLAC Latin America and the Caribbean. Demographic Observatory No. 2 Economically active population Table D LIMIT MODEL OF ACTIVITY RATES BY AGE OF THE RURAL POPULATION (Per cent) Activity rates Age Model 1 Model 2 Model 3 a b b b and over a Average of models 1 and 2. b For these age groups, the rates of the last available estimate for activity rates of the rural male population were maintained constant. Bibliography CELADE (Latin American and Caribbean Demographic Centre - Population Division of ECLAC) (2005), Demographic Bulletin, No. 76, Santiago, Chile, July. (1999), Demographic Bulletin, No. 76, Santiago, Chile, July. Pujol, José Miguel (1981), Métodos de proyección de la población urbana y rural por sexo y grupos de edades, Notas de población, No. 26, Santiago, Chile, Latin American Demographic Centre (CELADE), August. Pujol, José Miguel and Juan Chackiel (1984), Metodología de las proyecciones de población urbana-rural y de población económicamente activa, Métodos para proyecciones demográficas, Serie E, No. 1003, San José, Latin American Demographic Centre (CELADE), November. United Nations (1975), Methods for projections of urban and rural population, Manual VIII, (ST/ESA/SER. A/55), New York. 202

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