Microsimulation

The experimental tool of social sciences

Microsimulation is a modelling tool applicable across all science and industry, whose importance grows with increasing computational powers and data availability. It emulates the mechanics of a large system at the level of its single constituents, incorporating their individual characteristics, complex dynamics and mutual interactions. It can be used to analyse future scenarios, test and optimise strategies or design interventions. The technique challenges standard prediction methods by providing not only more accurate and precise answers, but also resolving much wider range of possibly highly specific questions. For example, how much do we need to subsidise healthy food to reduce the T2 diabetes cost projected in 10 years by more than the expected sugar tax income? How to geographically allocate the support and target specific demographic groups over this time?

Averisera has built a powerful, efficient and flexible microsimulation engine employing novel mathematical solutions and modern numerical techniques. Below we present its simple demonstrations.

Demographic changes in England and Wales after Brexit

Presented at International Microsimulation Association World Congress, Turin 2017; to appear in International Journal of Microsimulation

The impending exit of Britain from the European Union (Brexit) following the referendum on 23 June 2016 continues to bring up questions about the future demographics of the country and their socioeconomic implications. The rich multiethnic, multicultural structure of the UK society has been historically shaped by several waves of economically motivated migration, the last of which began after the accession of Eastern European countries to the EU in 2004. Similarly, Brexit will influence its future composition through population shifts in migration patterns between Britain and the rest of the EU. The country will undergo a significant demographic transformation, which can be expected to have a strong impact on the society and politics. Its exact nature will largely depend on the UK's stance on immigration after Brexit.

Microsimulation parameters

Initial population

5,000,000
Geographic area

European Union and the UK
Individual characteristics

date of birth, age, sex, ethnicity (same as mother's), fertility, reproductive history, history and likelihood of migration (young children migrate with mothers), mortality
Simulation period

1991-2041
Data sources
1991, 2001 & 2011 UK Census, birth and death registrations, International Passenger Survey and Labour Force Survey by Office for National Statistics

We use microsimulation to forecast and compare the impact of different policy scenarios on England and Wales demographics, considering different referendum outcomes and subsequent relationships with the EU:

  • Status quo extrapolates current population and migration trends
  • 2nd enlargement describes the UK remaining in the EU and subsequent additional inflow of immigration after the accession of new countries
  • Soft Brexit assumes that relations between the UK and the EU do not change significantly, and hence the migration flows experience only slight changes
  • Hard Brexit drastically limits the migration between the UK and the EU as many migrants lose the right of residence or decide to return to their country of origin
  • Hello World compensates the drastically limited migration between the UK and the EU with the inflow of new immigrants from non-EU countries

We analyse the implications of the scenarios for the future age, sex and ethnic structure of England and Wales population, and estimate its basic socioeconomic indicators.

Results

The figure presents the total size of the England and Wales population from 1991 to 2041 under the considered EU membership scenarios.

Differences of population size between the considered scenarios become apparent already after a few years, confirming the significant influence of Britain's EU membership on its demographics. Brexit will considerably slow down the population growth compared to the remain scenarios.

Click on the legend and date axis to display the difference between the selected scenario and the `Status quo' case or change the time range.

The figures show the change of the median age between now and 2036 under the considered EU membership scenarios. We compare male, female and total England and Wales population, and distinguish three (aggregated) ethnic groups: British citizens, EU immigrants and others.

The future median age of the England and Wales population inevitably grows. The trend concerns almost all sex and ethnic groups, except the EU immigrants in the 2nd enlargement scenario, in which it is inverted by a wave of young immigrants from new accession countries. In all Brexit scenarios, the median is expected to increase sharply for the EU immigrant population, as its youngest groups who have not been in the UK for long are more likely to return to their country of origin than their older peers. This increase is more pronounced for females, who are a larger part of the EU immigrant group. In general, Brexit will increase the median age of the total population more than the remain scenarios.

The figure presents the male to female ratio in the England and Wales population from 1991 to 2041 under the considered EU membership scenarios.

Since the percentage of women among EU immigrants is higher than the England and Wales population average, Brexit is predicted to increase the male to female ratio and consequently negatively impact natural growth.

Click on the legend and date axis to display the difference between the selected scenario and the `Status quo' case or change the time range.

The figure presents the ratio of workers to retirees group in the England and Wales population and their ethnic composition now and, following different EU membership scenarios, in 2036.

The proportion of people in productive age (20-60) to the retired ones (60 and above) will shrink considerably regardless of EU membership. The remain scenarios anticipate higher ratios than Brexit. In all cases the number of retirees among EU immigrants remains small.

Click on the bars to display the detailed ethnic composition of the immigrant group in the respective scenario.

The figure presents the percentage of women of reproductive age in the England and Wales population for the considered EU membership scenarios.

Click on the legend and date axis to see the difference of between the selected scenario and the `Status quo' case or change the date range.

The number of women of reproductive age (15-50) in the England and Wales population is predicted to fall in all considered EU membership scenarios. Brexit reduces their number sharply due to the specific age structure (younger) and gender ratio (more females) of the EU immigrant population. The overall ageing of the UK society imposes the same trend, although milder, also on the `Status quo' scenario. It can be forestalled only by the influx of new immigrants after the future EU enlargement. This factor, together with changing migration patterns, slows the total population size growth in Brexit scenarios.

All scenarios reveal two periods in which the analysed ratio increases slightly: in the first decade of this century and in years 2028–2036. The first is caused by the 2004 EU enlargement and the ensuing flow of immigrants from Eastern Europe, while the latter by their children entering reproductive age. These hallmarks of the past and forthcoming small “baby booms” can partially ameliorate the population ageing.

The population pyramids are displayed for the current England and Wales population and in 2036 for all considered EU membership scenarios.

Population pyramids for all considered EU membership scenarios will have the shape characteristic for an ageing society, with remain scenarios having broader lower half due to the influx of young immigrants. However, this broadening does not extend down to the lowest age groups, highlighting the difference between a population change due to natural growth and due to immigration.


 

The figure displays the changes within the ethnic groups of the England and Wales population due to natural growth and net migration between 2016 and 2036 for the considered EU membership scenarios.

Ethnic composition of the population can change by natural growth and migration. We find contributions of these two factors to ethnic group shifts between 2016 and 2036. In the remain scenarios, the population grows mainly through immigration from the rest of the EU (and new accession countries after the next enlargement) as well as births within this group. In the Brexit scenarios, British expats return, but do not counterbalance the negative natural growth of their ethnic group. The population size increases mainly through non-EU immigration and births within this groups (due to above-average fertility of some non-EU immigrant women), but also through the “Eastern European baby boomers” (the small baby boom and its echo resulting from the influx of young Eastern Europeans after 2004 described in paragraph “Women of reproductive age”).

Population change between   and    in       

Technical details

Conclusions

We performed stochastic microsimulations of the evolution of E&W population's age, sex and ethnic structure under several EU membership scenarios. The differences between Brexit and Remain cases, although significant, are mostly those of degree. In the constantly growing population, the median age and dependency ratios will rise, while the percentage of women of reproductive age will fall regardless of the EU membership status. These changes mostly result from lower average fertility rates and growing lifespan. Without Brexit, they could be partially forestalled by the waves of immigration from current and prospective EU countries and their children. At the same time, the share of native British in the E&W population will shrink, even with diminished presence of the EU immigrants, due to relatively high fertility rates of other ethnic groups. The only qualitative effects brought about by Brexit will be a temporary population size dip in Depopulation scenario and a significant increase of male to female ratio for Radical solutions. The above demographic changes will have important fiscal consequences both on the revenue (lower number of people in working age) and expenditure (higher medical care costs and higher fraction of pensioners, offset by lesser demand on school and maternity services) side.

Our results show that under every possible future circumstance, the E&W demographics will undergo a significant transformation, which can be expected to have strong impact on the society and politics. Its exact nature will depend on the path chosen by the UK after 2016. Microsimulation can be a useful tool for decision-makers faced with coming political choices.

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