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Forecasting Natural Population Change: the Case of Latvia

Author

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  • Aleksejs Melihovs

    (Bank of Latvia)

Abstract

The paper is devoted to the natural population change forecast in Latvia for the time horizon until 2030. The motivation for this paper is twofold. First, population ageing is an obvious problem for the whole EU with a tendency to worsen in the future. Second, historical population data have been revised based on the results of the last population census that took place in Latvia in 2011. This data correction could help to make a clearer vision of future tendencies in demographic indicators. However, for EU11 countries, including Latvia, the situation is more challenging. The approach developed in 2007 by Hyndman and Ullah is used for the natural population change forecasting. This approach combines functional data analysis and principal components decomposition. Although the applied approach is a technical one, it is useful for understanding what a policy maker could deal with in 15–20 years from now in the case of no-policy-change and no-population-habits-change scenario. By understanding this issue, it could be easier for the policy makers to make right decisions with a long-run perspective helping population and economy to be prepared well for the problems associated with population ageing that will accumulate in the future. The model is used to forecast mortality rate schedules separately for males and females as well as fertility rate schedules. The main findings of the paper are the following. The total period fertility rate is forecasted to increase to about 1.6 by 2030. Life expectancy at birth is projected to increase for males and females by 4 and 3.4 years respectively. Nevertheless, the natural population decrease in 19 years will reach 200 thousand including the decrease of about 190 thousand in population aged 20–64, while the old-age dependency ratio will increase to 36.5%.

Suggested Citation

  • Aleksejs Melihovs, 2014. "Forecasting Natural Population Change: the Case of Latvia," Discussion Papers 2014/03, Latvijas Banka.
    • Handle: RePEc:ltv:dpaper:201403
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    References listed on IDEAS

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    More about this item

    Keywords

    functional approach; fertility rates; mortality rates; population forecasting;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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