Module 12: Advanced Session on using the RAP
ILO, 2013
Key questions• What is the structure of the ILO RAP model? • What are the main sources of historical data and projections?• Dealing with POP– How to project the population?– How to calculate the survivors and newborns?– How to take into account migration?
• Dealing with EAP and LPR/AR– What are the parameters of the labour market?– How to project labour market data and unemployment rate?
• Dealing with ECO– How to project GDP and GDP deflator?
Labour market (EAP)
Demographic data (POP)
Macroeconomic data (ECO)
General government operations (GGO)
Costing of benefits
Summary and results
1. Input data
2. Estimated cost of benefits in absolute terms, as % of GDP, and as % of government expenditure
3. Projected cost of combined benefit packages
Structure of RAP
POP
AR
EAP ECO GGO(SQ)
BS 1 BS 2 BS 3 BS 4 BS 5
3. Summary of benefit costs
SUM
1. Input worksheets
2. Benefit worksheets to estimate the cost of scenarios
Structure of RAP
• national statistical offices• census and surveys• social security institutions and line ministries
ministry of planning: GDP and population projectionsministry of interior: registration for social benefitsministry of commerce: inflationministry of finance: budget, economic indicators
• central banks• research institutes, universities• UN/ILO population models, IMF’s World Economic Outlook
(alternative data sources)
Sources of data
• High, medium, and low projections of data reduce chances of error
• Finding reliable data is a challenge• Assumptions and projections may need to be done by
ourselves• Data from different sources may be conflicting and need to
be cleaned up and validated• Partnering with institutions (e.g. Institute of Statistics in
Indonesia, HISRO in Thailand) can provide comprehensive and coherent data, and validate assumptions and projections
Sources of data
Coresia RAP: ‘Population’
Dealing with POP
• Projected population by age and gender is used in other projections like labour force, number of unemployed, etc.
• Population projections can be obtained from official sources or self-projected using the cohort component method
• Cohort component method uses current year (t) population data, no. of newborns (linked to fertility), survivors (linked to mortality), and net migration, to project next year (t+1) population
Population in year t
Survival rate
Net migration
Population in year t +1
(for ages > 1)
Fertility rate
Sex ratio at birth
Population in year t +1
(for ages < 1 i.e. newborns)
Population in year t+1
(for all ages)
Cohort component method
Cohort component method
• The mortality rate is derived from life tables, from which the number of survivors can be determined
• Life tables can be used to depict life expectancy of the population and thus, estimate the number of deaths
• We can use life tables of a country, UN life tables and the Coale-Demeny life tables
Estimating mortality rates
• 5 life expectancy patterns were mapped.
• The geographical region predominant within each patterns gives the name to that pattern: Latin American pattern Chilean pattern South Asian pattern Far Eastern pattern General pattern 0 9 18 27 36 45 54 63 72 81 90
-0.050
0.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
Mortality pattern of females: e0=75 years
GeneralSouth AsiaFar EastLatin AmericaChile
UN life tables
Deaths(2010) =Mortality(2010) x Pop(2010)
Survival(2011) = Pop(2010) - Deaths(2010)
Age Mortality Pop Deaths SurvivalMale 2010 2010 2011
0 0.0084 356,209 2,992
1 0.0007 373,622 262 353,217
2 0.0007 403,800 283 373,360
3 0.0007 449,310 315 403,517
4 0.0007 414,605 290 448,995
5 414,315
Estimating mortality rates
• Age-specific fertility rate: Number of child births for women of a particular age.
• Total fertility rate: Average number of children a woman can give birth to during her lifetime; it is the sum of the age-specific fertility rates during the child bearing period
• Typical child-bearing period is from age 15 to 49• Sex ratio: Ratio of males to females in the population
Fertility rate
Age group Fertility rate
Female Pop
Newborns Newborns (M)
Newborns (F)
15-19 0.00980 2,552,600 25,015 12,872 12,14320-24 0.06910 2,557,443 176,719 90,933 85,78625-29 0.12430 2,617,716 325,382 167,430 157,95230-34 0.07960 2,671,012 212,613 109,403 103,21035-39 0.03080 2,824,040 86,980 44,757 42,22340-44 0.00740 2,830,251 20,944 10,777 10,16745-49 0.00080 2,733,680 2,187 1,125 1,062Total TFR =1.609 18,786,742 849,840 437,297 412,543
Estimating number of newbornsNewborns =
Fertility x Female pop
• Net migration = Immigration (inbound migrants) – Emigration (outbound migrants)
• International migration can fluctuate widely every year depending on socioeconomic and political factors. Thus, it is primarily forecast in numbers by age group and gender, rather than as rates.
• International migration is usually small compared to total population.
• Usually we assume net migration = 0
Estimating net migration
Coresia RAP: ‘Economically Active Population’
We need historical data, projected distribution of the parameters by age group and gender:• Labour force or Economically Active Persons (EAP)• Labour market participation rate or activity rate• Employed persons• Unemployed persons• Unemployment rate
Labour force data
Population (>15)
Labour force or Economy
Active Population
Employed
Unemploye
d
Non Labour Force
(including students, retirees, disabled)
Unemployment rate (%) = No. of unemployed /
Labour force
Labour force participation rate (%) =
Labour force / Total population above legal
working age
Labour force data
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 951000
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Pop_M
LAB_M
Age
Demographic and labour force data: Thailand, 2007
Labour force data
• Unemployed persons = Projected male EAP x Male unemployment rate + Projected female EAP x Female unemployment rate
• Unemployment rate = Unemployed persons / EAP• Historical unemployment rates are used to calculate a trend• The trend is used to project unemployment rates
Estimating unemployment data
Historical data and trend lines for unemployment rate in Coresia
Estimating unemployment data
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
0.5
1
1.5
2
2.5
3
3.5
4
f(x) = − 0.859724171938104 ln(x) + 3.22155973816361R² = 0.972115365036429f(x) = − 0.926692519838334 ln(x) + 3.20084161460719R² = 0.947435793224986
MalesLogarithmic (Males)FemalesLogarithmic (Females)
Coresia RAP: ‘Economic’
• Mainly concerned with projections of economic growth• Macroeconomic projections can be obtained from official
sources, research institutes, national authorities, international organizations, or be self-projected
• GDP at current price = GDP at constant price (volume effect) x GDP deflator (price effect)
• Using the formulas, participants can project one parameter provided the other two are available
• GDP at constant price = Productivity * Employment• Employment = Labour force (EAP) – Unemployment
Dealing with ECO
Dealing with ECO
• Inflation is the rate of increase in the average price level of the economy. It is commonly measured by CPI, headline inflation, GDP deflator
• GDP deflator compares prices of all goods and services produced within the country in the current year, with the base year prices
• CPI reflects the prices of goods and services purchased by the consumers
• Headline inflation reflects the prices of all goods and services consumed in the country, including fuel and food
• In developing countries, headline inflation may be preferred
Dealing with ECO