Methodology

Methodology

Note: For instructions on how to directly access the data, see the section ‘How to Get the Data’, should anyone want to verify the results, here.

The methodology involves no data modelling, forecasting or even statistics.   It is the simple comparison of two numbers, expressed as a ratio.  The first is the number of newborns that are reported to Eurostat; i.e. children under one year old.   The second is the number of fifty year olds, for reasons we will come on to.  We take the difference in the two, newborns less fifty years olds, and express that as ratio compared to fifty year olds.  If there were 40,000 newborns, and 50,000 fifty year olds, the ratio would be (40,000 – 50,000)/50,000 = -20%

A useful aspect of the Birth Gap ratio  is it compares two distinct groups that should, approximately, contain the same number of people for there to be a stable population. (For simplicity, we are ignoring the fact we need a greater number of newborns given that not children will survive to age fifty).  Other forms of population metrics obscure population trends completely by counting total populations, and with people tending to survive longer in recent decades, we get confounding metrics that make us wrongly think that populations are set for continued growth or at least stability.

By comparing any two sets of age groups, we can get an indication of trends, but the newborn and fifty year old groups offer a particularly interesting perspective.   Firstly, they are quite far apart, and so are able to tell us about the longer term trends.  Moreover, these groups are in fact naturally linked if we follow them over time.  Our newborns will start to walk, talk and go to school, and somewhere around ages 16 to 25 find their first job.  In that same timeframe, our fifty year olds will reach ages 66 to 75, which is very close to the range of retirement ages we typically see.  So, when each fifty year old reaches retirement age, the workforce loses a worker, and  one of our group of newborns should then be ready to take their place to maintain a stable workforce.  If however there is a Birth Gap, and there are fewer newborns, there will be an economic impact when businesses cannot replace their retirees. It is likely that businesses will move or close, or salaries will rise to the point that businesses will become uncompetitive.  Immigration is often seen as the solution to these issues, but based on 2015’s birth rate, Germany would need one immigrant for every child born. For Germany, we can already see the scale of the challenge that lies ahead.

Birth Gap is therefore a measure of the future sustainability of a region’s workforce.  Children cannot be created on demand, so we can foresee with a high level of certainty, the economic impact that lies ahead.  Few other measures can be predicted with such confidence.