Economics of the EU

• • Human Development Index (HDI)
  • Is used to measure the development of countries by using not only their production or income levels, but also their capabilities.
• • Ageing population
  • Defined as the ratio between the number of people aged 20-64 years per person aged 65 years or more
• Ageing population implications

  • Increased costs for households
  • Strains on the financial sustainability of the welfare state
  • Pension systems, health and social care services
  • Strains on the provision of health and social care services
  • Decreased government revenues
  • Decreased social security contributions collected from the population of working age
  • Decreasing economic growth due to the declines in labour force and population growth
  • Decline in aggregate consumption
• Countries are classified into 4 levels of human development according to their HDI score:

  • Very high human development → HDI ≥ 0,80
  • High human development: 0,70 ≤ HDI < 0,80
  • Medium human development: 0,55 ≤ HDI < 0,70
  • Low human development: HDI < 0,55
• Emigration has two basic and important effects:

  1. A decrease in wage differentials
  2. An increase in labour productivity (GDP/employment)
• Migration determinants

  • Main determinant = wage differentials between the regions of origin and destination
  • Age
  • Family factors
  • Education level
  • Distance
  • Unemployment
• Natural decrease

  • More deaths than births
• • Natural population change
  • The difference between the number of live births and deaths during a given period of time (ex. a year)
• • Net migration
  • The difference between immigration into and emigration from a given area during a given period of time (ex. a year)
• • Net outward migration
  • More people emigrating than immigrants arriving
• • Population dynamics depend on:
  • The population natural change can net migration
• • Present discounted value
  • Economics valuation of future rewards are considered in what we economists call, Present Discounted Value.
  • The amount you should be willing to pay in the present for a stream of expected future payments.
• • Purchasing Power Parities (PPPs)
  • Koopkrachtparitiet of purchasing power parity is een manier om de koopkracht van twee handen te vergelijken.
• • Replacement level
  • The average number of live births per woman that is required to keep the total number of inhabitants at a constant level in the absence of migration.
• • The decision to invest in higher education can be analysed using cost-benefit analysis:
  • Direct costs
  • Books, tuition fees, school materials, …
  • Indirect costs
  • Opportunity cost of not working
  • Benefits
  • Higher future wages
• • The decision to migrate to a foreign country:
  • Costs
  • Transport, income forgone until employment, change of housing, personal and other
  • Benefits
  • Wage gains in country of destination
• The Index of Human Development, measurement

  • Health - life expectancy at birth
  • Education
  • Expected years of schooling for childeren of school entering age
  • Mean of years of schooling for adults aged 25 years and more
  • (average of these 2)
  • Standard of living - gross national income per capita
  • Income generated by primary factors of production (labour and capital), owned by resident citizens, measured in USD
• • Total fertility rateThe number of children that would be born to a woman if she were to live to the end of her childbearing years and bear children in accordance with age-specific fertility rates of the specified year.