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Demographic transition, economic development and tourism demand: how are they
interrelated?
An analysis of the Italian case
Boccella N. , Quarto A. and Rinaldi A.
1 2 3
Abstract
The aging of population, the rise of female population, the increase of migration flows are all
factors that need to be taken into account when analyzing tourism demand changes. This is the
aim of this paper: studying the links between demographic trends and tourism demand.
We find that the growing share of older persons in the total population is associated to the low
percentage of holidays made by people over 65, the rise of female population leads to a decrease in the
demand for trips and holidays and, finally, the increase in resident foreigners should have a positive
effect on the demand for tourist products.
JEL-classification: E01, E21, O11, N14, N34.
Keywords: demand, tourism, demographic transition, migration, growth.
Sapienza University of Rome, nicola.boccella@uniroma1.it
1
Sapienza University of Rome, angelo.quarto@uniroma1.it
2
Unitelma- Sapienza University of Rome, azzurra.rinarldi@unitelma.it
3
1
1. Introduction
This paper studies the links between demographic trends and tourism demand. An aging
population, the rise of female population, the increase of migration flows are all factors that
need to be taken into account when analyzing tourism demand changes. Indeed, the share of
older persons in the total population is progressively growing, essentially because of the higher quality
of life. This trend is associated to the low percentage of holidays made by people over 65, that can be
due, in part, to the economical difficulties they face. About females, we know they travel less than
males, so the rise of female population leads to a decrease in the demand for trips and holidays. Finally,
the increase in resident foreigners should have a positive effect on the demand for tourist products,
which could partially compensate the negative effects related to the aging factor, thanks to a better
integration and the increase of salaries.
2. Demographic trends, economic development and tourism demand: a literature review
Even though the effect of past and future demographic trends on growth remains largely unexplored,
they are mostly connected to the size and quality of the work force. Here we try to highlight some of
the most influential contributions about the relation between demographic trends and economic growth,
starting from some basics: Lucas (2002) explores the micro foundation for the fundamental links
between economic and demographic variables from pre-industrial times to the present day.
2
Galor and Moav (2002) draw up an unified theory that encompasses the evolution of population,
technology and output in the transition from a Malthusian epoch to an epoch of sustained economic
growth. The authors find that the phase of prolonged economic stagnation that preceded the transition
to a phase of sustained growth had the effect to cause a natural selection. This natural selection in turn
shaped the evolution of the human species, which determined the take-off from stagnation to economic
growth.
Some authors stress the link between fertility and income distribution. Among the others, Ashraf, Weil
& Wilde (2011) find that income per capita in the short run is affected by reduced fertility (through the
dependency effect and, to a lesser extent, through the labor supply effects). The dependency effect
results in a high-fertility environment, a reduction in fertility leads, at least temporarily, to a higher
ratio of working-age adults to dependents. The labor supply effects states that if older workers
participate in the labor market at a higher rate than workers just entering the workforce, the shifting age
distribution towards higher ages will lead to higher overall labor force participation, thereby increasing
income per capita.
Even Jones, Schoonbroodt & Tertilt (2008) revisit the relationship between income and fertility. They
assert that, in most countries, at most times, fertility is negatively related to income.
Dahan & Tsiddon (1998) prove that, in the process of economic development, fertility and income
distribution follow an inverted U-shaped dynamics. In the first stage, fertility increases and income
inequality widens, whereas in the second stage fertility declines, income becomes more equally
distributed, and income per capita grows.
De la Croix & Doepke (2003) find that an increase in inequality lowers average education and growth.
According to the authors, this happens because poor parents usually have many children and tend to
invest little in education. A mean-preserving spread in the income distribution increases the fertility
differential between the rich and the poor, which implies that more weight gets placed on families who
provide little education.
3
As it is well known in the literature, there is also a connection between mortality and economic growth.
Cervellati and Sunde (2011) study the endogenous demographic transition: a transition in fertility as
well as mortality, together with an economic transition and the change in the education composition of
the population.
Strulik (2004) and Boucekkine, de la Croix, and Licandro (2002) examine the role of exogenous
reductions in mortality as a stimulus for the economic transition.
Ram and Schultz (1979) stress that improvements in health and longevity conditions induce an increase
in investment in schooling. As a consequence, since longevity increases, population grows and this may
be favorable to economic growth.
Some authors also stress the importance of the link between crude death and economic growth.
Lorentzen, McMillan & Wacziarg (2008) find that high adult mortality reduces economic growth by
shortening time horizons. Higher adult mortality is related to increased levels of risky behavior, higher
fertility, and lower investment in physical and human capital.
Kelley and Schmidt (1995) note that a decrease in the crude death rate increases economic growth,
especially in the least developed countries, because in those countries mortality reduction is
concentrated in the younger and working ages.
Blanchet (1988) reports that reductions in crude death rate stimulate per capital economic growth.
Finally, it is well documented that life expectancy may be significant for economic growth. Indeed,
Castelló-Climent and Doménech (2006) study the poverty trap: children raised in poor families have
low life expectancy and work as non-educated workers. This way, life expectancy explains a great part
of the relationship between inequality and human capital accumulation.
4
Cervellati and Sunde (2005) highlight the interaction between longevity and the transition in the
education composition. According to the authors, mortality differentials can explain the differences in
development across countries.
Barro and Sala-I-Martin (1995) stress the importance of life expectancy as a determinant of growth: a
13 year increase in life expectancy is estimated to raise the annual growth rate by 1.4 percentage points.
3. Demographic aging in Europe: a brief overview
Available data on present and future demographic growth in the European Union and, generally
speaking, first world countries, highlight a constantly increasing aging of the population.
The number of elderly people compared to the total population is progressively growing, essentially
because of the higher quality of life. Economic growth, an higher wealth, the improvement of health
conditions and health care and the progress made in the medical field are leading to an increase in the
average age of the population and of life expectancy. As it is commonly known, an increase in
longevity raises the average age of the population, since it increases the numbers of surviving older
people. If we associate this phenomenon with a declining birth rate, we can conclude that, in the near
future, the average age of the population will keep getting higher. This trend would be partially
balanced only by migration flows. The 20.2 million of immigrants present in the EU in 2010 (that
could become 40 millions in 2050, according to Eurostat forecasts), should contribute to “rejuvenate”
the European population.
5
The aging of the population (that is, percentage ages 65 and over) leads to intense social changes,
starting with social security. Indeed, the number of elderly, retired people not compensated by young
workers could become financially unsustainable. Even the age for retirement grows, slowing down the
entry of young workers into the labor market.
Apart from the direct impact on public finance in each EU country, we must also consider the structural
and infrastructural changes we should face to cater for the changed needs of a population over 65 and
how to satisfy the new demand.
4. Demographic trends and tourism demand in Italy: current situation and future perspectives
On the basis of these trends, our study focuses on current and forthcoming demographic changes in
Italy and on the consequences they will generate on tourism demand. Data elaborated by the National
Institute of Statistics (ISTAT) on the Italian demographic structure show that:
1. the percentage of people aged 65 and over will rise from 20% (year 2011) to 32% in 2042 and
will keep growing;
2. the decrease of the working population (15-64 years old) will lead from the current percentage of
65.7% to a 62.8% in 2026, up to a minimum of 54.3% in 2056;
3. the population under 14, which is today 14%, will slightly decrease until 2037, when it will be at
the all time low of 12.4%;
4. there is a steady rise of female population;
5. the overall population will slightly grow until 2042 and then it will start decreasing;
6. foreign population resident in Italy is rapidly increasing, going from 4.6 million in 2011 up to
14.1 million in 2065.
Analyzing the data on the Italian demographic structure, it emerges that 20% of the population is over
65 and only 14% is between 0 and 14, a condition which could lead to big changes in the structure of
the labor market (Table 1.).
6
This situation, stable from 2001 to 2010, will further deteriorate to arrive about to 12% in 2030, while
over 65 will pass from actual 20% to 26% in 2030, with an increment of more than 4,2 millions of
persons respect of to nowadays, to which provide for pensions and health care (Table 1.).
If we analyze the data of the range 25-44 years, we find a drastic reduction in the population of this
age, in fact it passes from 31% of 2001 to 22% of 2030. In this age group we find a concentration of
workers, that with their contributions will have to bear the burden of over 65 pensions.
The age group 45-64 has a not prominent increment, passing from actual 27% to, about 29% of 2030,
confirming the progressive aging of population.
If we analyze the demographic data to a territorial level, we have some indications about the inequality
of development in the areas of North – Centre Italy respect of South Italy and Islands.
From resident population data of age groups in 2001 (Table 2.) we have the over 65 group is mainly
represented in North–East and North–West Italy, in which they reach the percentage of about 20%,
while in South Italy and Islands this value is about 16%.
This gap is evident also in the age group 0-14, in Centre and North Italy they reach values of about
13%, while in South Italy and Islands the values of 16 -17% (Table 2.).
These differences could be explained in consideration of internal migration of last years in Italy, when
active population moved from South to North. After years of internal migrations without a substantial
flow of return in origin, the over 65 population has incremented in North and Centre Italy, at the same
time birth rates in the South and Islands remained higher than in the Centre and North, increasing the
gap between the two areas of the country even in the 0-14 group. From these data, it appears that the
Centre and North of Country is aging and will shrink the range of active population, while the birth of
more areas of South and Islands will continue to provide young workers with most industrial areas of
Centre and North Italy, enduring the flow of internal migration.
If we analyze the data, in a future perspective, we annotate that the difference between Centre and
North Italy and South and Islands increase the over 65 population to about 18%, while in Centre and
North Italy stands at about 21% (Table 3-4-5). The population in the 0-14 group shows a convergence
between the values of Centre and North (about 13%) and South and Island (about 15%). The
convergence trend will continue in the years to 2020 to reach an equality in 2030, with over 65 to about
26% and 0-14 to about 12% (Table 4-5). These data may also indicate a convergence in compliance
7
with economic development with a reduction of internal migration, as characteristic of Italy in recent
years, that are not yet completely arrested.
In the tourism market, there have already been evident changes in the demand of tourism products,
especially in the over 65 customers.
We also considered as a factor of change the rise of the female population: currently, the Italian
population is composed by 51.5% female and 48.5% male (Table 6.). Even though percentages seem to
be quite similar, yet it's interesting to note the difference between the age groups, which is minimal in
the ages between 0 and 14 up until the ages from 45 to 64 but becomes very noticeable in the over 65
category, where the male percentage is 8.5% and the female 11.7% (Table 6.).
This difference leads to different consumer's choices both in general and in the touristic sectors.
As for the data relative to the holidays made by the different age groups, it emerges that in Italy the
over 65 age group is only 7.4% (it grows to 8% if we don't consider traveling for work), (Table 7.).
The group of population that travels more has been that since 24 a 44 years with 39%, had followed by
that since 45 a 64 years (Figures 1.)
About 82% of travel destinations chosen by Italian tourists are within Italy and only 18% of Italian
tourists choose a foreign country, confirming the theory that Italians prefer to travel in Italy.
In the table 8, it can be noticed by analyzing the data on travels distinguished by age groups and sex
that females use to travel less than males (if we also consider the work travels).
As for our purpose, this factor may reveal itself to be crucial, since the rise of female population may
lead to a decrease of tourism demand.
The low percentage of holidays made by people who are over 65 can be partly due to the economic
difficulties they face, having to survive on low pensions, that don't leave enough money for holidays.
To solve this problem or at least to give elderly people the chance to go on holiday, there has been a
growth of the so called “social tourism”, often linked to work or religious associations.
As a future prospect, people over 65 will be a stronger category and their demand will have to be
satisfied by an increasing and diversified offer.
Thanks to these data, we can also underline the need of specific economic policies that could take into
account the new needs coming from older people, not focusing exclusively on health care or containing
costs.
8
5. Aging population and tourism demand: some policy implications
We saw that Italy is undergoing deep demographic changes that will result in a transformation of labor
market, demand structure and overall wealth. In our opinion, government will have to deal with such a
new panorama, by adopting specific economic policies.
As for tourism, one of the most commonly chosen policy is related to the so-called social tourism.
Social tourism may be defined as “the relationships and phenomena in the field of tourism resulting
from participation in travel by economically weak or otherwise disadvantaged elements in
society” (Hunziker, 1951). At a macroeconomic level, this kind of policy measure has positive effects
on aggregate demand, since it increases national tourism demand by allowing people who couldn’t
afford it to travel.
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13
Table 1. Resident population in Italy (years 2001, 2010, 2020, 2030)
Source: Our elaboration on ISTAT
Table 2. Resident population in Italy at territorial level (year 2001)
2001
2010
2020
2030
Age groups
Value
%
Value
%
Value
%
Value
%
0-14 years old
8,109,389
14.2
8,477,937
14.1
8,479,126
13.6
8,006,023
12.6
15-24 years
old
6,345,415
11.1
6,085,753
10.1
6,048,596
9.7
6,183,973
9.7
25-44 years
old
17,510,008
30.7
17,477,731
29.0
15,317,046
24.5
14,308,863
22.5
45-64 years
old
14,374,281
25.2
16,092,437
26.7
18,589,504
29.7
18,403,070
29.0
65 and over
10,654,649
18.7
12,206,470
20.2
14,062,815
22.5
16,580,967
26.1
Total
56,993,742
100.0
60,340,328
100.
0
62,497,087
100.
0
63,482,897
100.
0
North-West*
North-East
Center
South
Islands
Age groups
Value
%
Value
%
Value
%
Value
%
Value
%
0-14 years
old
1,885,36
9
12.
6
1,364,36
3
12.
8
1,409,61
8
12.9
2,375,22
8
17.1
1,074,81
1
16.3
15-24 years
old
1,429,63
6
9.6
1,012,81
9
9.5
1,117,25
2
10.2
1,910,53
1
13.7
875,177
13.3
14
Source: Our elaboration on ISTAT
* North-West: Aosta Valley, Piedmont, Lombardy, Liguria
North-East: Trentino Alto Adige, Veneto, Friuli Venezia Giulia, Emilia-Romagna
Center: Tuscany, Umbria, Marche, Lazio
South: Abruzzo, Molise, Campania, Apulia, Basilicata, Calabria
Islands: Sicily, Sardinia
Table 3. Resident population in Italy at territorial level (year 2010)
25-44 years
old
4,641,52
3
31.
1
3,355,17
7
31.
5
3,328,51
3
30.5
4,199,43
7
30.2
1,985,35
8
30.1
45-64 years
old
4,012,75
5
26.
9
2,772,86
9
26.
1
2,840,60
8
26.0
3,190,30
7
22.9
1,557,74
2
23.6
65 and over
2,967,16
3
19.
9
2,133,29
0
20.
1
2,215,44
5
20.3
2,235,32
3
16.1
1,103,42
8
16.7
Total
14,936,4
46
100
.0
10,638,5
18
100
.0
10,911,4
36
100.
0
13,910,8
26
100.
0
6,596,51
6
100.
0
North-West
North-East
Center
South
Islands
Age groups
Value
%
Value
%
Value
%
Value
%
Value
%
0-14 years
old
2,161,28
7
13.5
1,595,30
6
13.8
1,586,87
5
13.4
2,156,11
6
15.2
978,353
14.
6
15
Source: Our elaboration on ISTAT
Table 4. Resident population in Italy at territorial level (year 2020)
15-24 years
old
1,410,59
0
8.8
1,029,53
0
8.9
1,108,24
7
9.3
1,735,06
8
12.2
802,318
11.9
25-44 years
old
4,632,40
7
28.9
3,383,19
0
29.2
3,423,58
7
28.8
4,109,95
0
29.0
1,928,59
7
28.
7
45-64 years
old
4,365,49
7
27.3
3,121,16
9
27.0
3,205,01
2
27.0
3,642,06
3
25.7
1,758,69
6
26.
2
65 and over
3,446,44
2
21.5
2,441,15
1
21.1
2,548,60
9
21.5
2,522,83
6
17.8
1,247,43
2
18.
6
Total
16,016,2
23
100.
0
11,570,3
46
100.
0
11,872,3
30
100.
0
14,166,0
33
100.
0
6,715,39
6
100
.0
North-West
North-East
Center
South
Islands
Age groups
Value
%
Value
%
Value
%
Value
%
Value
%
0-14 years
old
2,277,43
7
13.5
1,691,51
7
13.7
1,670,16
2
13.3
1,930,993
13.7
909,045
13.6
15-24 years
old
1,562,87
9
9.3
1,166,90
0
9.4
1,152,99
2
9.2
1,490,995
10.6
674,854
10.1
25-44 years
old
3,974,12
3
23.6
2,979,57
1
24.1
3,112,80
6
24.8
3,561,668
25.3
1,688,928
25.2
45-64 years
old
5,069,15
4
30.1
3,734,39
0
30.2
3,742,56
8
29.8
4,089,675
29.1
1,953,778
29.2
65 and over
3,935,54
7
23.4
2,792,52
7
22.6
2,887,04
8
23.0
2,982,120
21.2
1,465,604
21.9
16
Source: Our elaboration on ISTAT
Table 5. Resident population in Italy at territorial level (year 2030)
Source: Our elaboration on ISTAT
Total
16,819,1
40
100.
0
12,364,9
05
100.
0
12,565,5
76
100.
0
14,055,45
1
100.
0
6,692,208
100.
0
North-West
North-East
Center
South
Islands
Age groups
Value
%
Value
%
Value
%
Value
%
Value
%
0-14 years
old
2,202,924
12.8
1,661,53
9
12.8
1,611,64
2
12.4
1,715,35
1
12.5
814,589
12.4
15-24 years
old
1,690,580
9.8
1,268,64
4
9.8
1,241,55
7
9.5
1,346,58
9
9.8
636,624
9.7
25-44 years
old
3,841,289
22.2
2,939,83
2
22.7
2,988,67
8
23.0
3,082,81
9
22.5
1,456,29
7
22.2
45-64 years
old
4,979,327
28.8
3,740,66
4
28.9
3,796,12
0
29.2
3,984,75
7
29.1
1,902,25
3
29.0
65 and over
4,558,807
26.4
3,331,80
5
25.7
3,363,66
3
25.9
3,581,96
1
26.1
1,744,78
1
26.6
Total
17,272,92
7
100.
0
12,942,4
85
100.
0
13,001,6
60
100.
0
13,711,4
77
100.
0
6,554,54
4
100.
0
17
Table 6. Resident population in Italy for age groups and sex (year 2010)
Source: Our elaboration on ISTAT
Table 7. Type of travelling for age groups (year 2010)
Age groups
Male
%
Female
%
Total
%
0-14 years old
4,359,658
7.2
4,118,279
6.8
8,477,937
14.1
15-24 years old
3,119,596
5.2
2,966,157
4.9
6,085,753
10.1
25-44 years old
8,787,118
14.6
8,690,613
14.4
17,477,731
29.0
45-64 years old
7,882,496
13.1
8,209,941
13.6
16,092,437
26.7
65 and over
5,138,535
8.5
7,067,935
11.7
12,206,470
20.2
Total
29,287,403
48.5
31,052,925
51.5
60,340,328
100.0
Holiday
1-3 nights
Holiday
4 nights or
more
Holiday
Age groups
a
b
c=a+b
0-14 years old
7,024
9,162
16,186
15-24 years old
3,090
5,227
8,317
25-44 years old
15,751
15,976
31,727
45-64 years old
12,215
11,888
24,103
65 and over
2,617
4,500
7,117
Total
40,696
46,754
87,450
18
Source: Our elaboration on ISTAT
Table 8. Tourist's characteristics year 2010 (in miles)
Source: Our elaboration on ISTAT
Holiday
1-3 nights
Holiday
4 nights or
more
Holiday
Work
Total
travelling
Age groups
a
b
c=a+b
d
e=c+d
Male
0-14 years old
3,536
4,910
8,446
-
8,446
15-24 years old
1,680
2,635
4,315
307
4,622
25-44 years old
7,966
7,333
15,299
5,295
20,593
45-64 years old
5,597
5,843
11,440
3,516
14,956
65 and over
1,407
2,131
3,538
272
3,810
Total
20,186
22,851
43,038
9,389
52,427
Female
0-14 years old
3,488
4,252
7,740
-
7,740
15-24 years old
1,410
2,593
4,002
105
4,107
25-44 years old
7,785
8,644
16,429
2,157
18,586
45-64 years old
6,618
6,045
12,663
931
13,594
65 and over
1,210
2,369
3,579
7
3,586
Total
20,510
23,902
44,412
3,201
47,613
19
Figure 1. Travelling for age groups (year 2010)
Source: Our elaboration on ISTAT
Figure 2. Holiday for age groups (year 2010)
Source: Our elaboration on ISTAT
Figure 3. Work travels for age groups (year 2010)
20
Source: Our elaboration on ISTAT
21
