The Fiscal Impact of Demographic Change in Ten Latin American Countries
239
Figure 7.1 Percent of GDP Spent on Public Education, Disaggregated by Education Dependency Ratio and Benefit Generosity Ratio, 2005 17
Sweden Slovenia Finland Portugal Italy AustriaNorway France United Kingdom Netherlands Germany Czech Republic United States Spain Australia Japan
13
11
9
7
Argentina Costa Rica Brazil 7 Uruguay Chile
5
6
Mexico Colombia Peru
Nicaragua
30
40
50
60
70
80
5 4
3 90
100
110
percentage of GDP
average public education benefit (as a percentage of GDP per working-age adult)
Denmark 15
120
school-age population (as a percentage of working-age population)
Source: Authors’ calculations.
whereas among our OECD sample, the school-age population is about 40 percent of the working-age population. Thus, the two groups face very different demographic burdens in educating the next generation. The y-axis of figure 7.1 shows the BGR. Mean education spending per youth in OECD countries is 12 percent of GDP/worker, while most countries in Latin America invest half that amount. This large difference is a reflection of differences in both enrollment rates and spending per student. (For a detailed analysis of these differences in secondary education, see CELADE [2008]). Spending isoquant curves show all the possible combinations of BGRs and sector dependency ratios that yield a given level of aggregate spending. The isoquant curves shown in the figure range from 4 percent of GDP to 7 percent of GDP. On average, both groups are devoting the same relative amount of resources to educate the next generation (about 5 percent of GDP), but with vastly different amounts of investment per youth due to the high proportions of children in most Latin American societies. Population aging in Latin America will result in a substantial reduction of the fiscal burden associated with financing education and make possible significant increases in educational investment in youth. Educational dependency ratios have been falling and will continue to