Abstract
Purpose The purpose of this paper is to answer the following two questions: Will Saudi Arabia get older? Will its pension system be sustainable? Design/methodology/approach The methodology/approach is to forecast KSA’s population with wavelet analysis combined with the Burg model which fits a pth order autoregressive model to the input signal by minimizing (least squares) the forward and backward prediction errors while constraining the autoregressive parameters to satisfy the Levinson-Durbin recursion, then relies on an infinite impulse response prediction error filter. Findings Spectral analysis projections of Saudi age groups are more optimistic than the Bayesian probabilistic model sponsored by the United Nations Population Division: Saudi Arabia will not get older as fast as projected by the United Nations model. The KSA’s pension system will stay sustainable based on spectral analysis, whereas it will not based on the U.N. model. Originality/value Spectral analysis will provide better insight and understanding of population dynamics for Saudi government policymakers, as well as economic, health and pension planners.
Highlights
The proportion of people aged 60 or more will represent 25 per cent of the total Saudi population of 40 million by the end of 2050
We present the rationale of selecting spectral analysis for population projections and a four-step methodology based on spectral analysis that belongs to deterministic methods as opposed to probabilistic methods, such as our benchmark which is a Bayesian probabilistic model
We forecast the population values of the 17 age groups from 2020 to 2100 using the Burg method combined with wavelet analysis
Summary
The proportion of people aged 60 or more will represent 25 per cent of the total Saudi population of 40 million by the end of 2050. The number of people aged 80 or more is expected to reach 1.6 million, or 4 per cent of the total population in the same period (Abusaaq, 2015). The number of pension benefits claimants will rise and the working class will have to pay extra pension costs in that period. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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