| Hello, *|NOME|* The world is undergoing a major demographic transformation, which affects countries differently according to their level of income and development. In rich countries, the population is older and has fewer children. In middle-income countries, the population is in transition, with fertility and mortality falling. In poor countries, the population is still growing, but at ever-decreasing rates. Brazil is discordant with such countries, as it has the demographic behavior of a rich country without, however, having reached a high-income level. From the end of the 1990s until the beginning of the next decade, Brazil will have a development-friendly age structure, known as the demographic bonus. This phenomenon occurs when the proportion of people of working age is higher than that of dependents (children and the elderly), generating a window of opportunity for increased productivity. However, the country has not been showing signs that it will take advantage of this chance to get rich. With relatively low economic growth since 1980 and a rapid aging process, a crucial question is gaining momentum: Will we get old before we get rich? Projections show that by 2060 the world will have 10.67 billion inhabitants and more than 5.2 million centenarians. The median age of the world's population will be 39.4 years, --47.1 years among the richest. With the exception of Africa, all other continents will have an average age of more than 40 years. That same year, Brazil will be older than the world average and close to the rich countries: the average age of Brazilians will be 45.3 years (only 1.8 years less than the average of rich countries). Youth, the driving force behind economic growth, will reach its greatest size in the next decade and shrink thereafter. This poses increasing challenges to ensure well-being and quality of life. Faced with this scenario, IMDS has carried out a series of studies to answer the following question: in this latest demographic wave, are Brazilian youth adequately prepared to face the demand for productivity gains necessary to produce wealth in a country with a growing number of elderly people? One of IMDS’s exploratory analyses consists of a scoreboard of indicators on the situation of youth. The "Panel on Youth Indicators" analyzes people aged 15 to 29 based on data from SAEB and PNAD Contínua. It is divided into three axes: sociodemographic characteristics, capacity development, and productive insertion. The indicators suggest that young people go through a process of emancipation between the ages of 18 and 24 and reach a higher level of participation in the labor market between the ages of 25 and 29. However, poor education received in basic education negatively affects the productivity of young people when they enter the labor market, compromising not only their professional careers, but also the generation of wealth. Women, especially those with less schooling, face even more difficulties in professional insertion. IMDS prepared and released a presentation entitled "Main Challenges for Youth in Brazil and Impacts on Income and Productivity" (article in Valor Econômico) In this innovative study, we show that the low level of education of young people and the reduced participation of women in the labor market have a negative impact on the ability to generate income and wealth in Brazil. This result is particularly relevant when compared to two other countries: Chile and South Korea. For the counterfactual exercise, we simulated the impact on income generation had Brazil possessed Chilean or South Korean schooling. According to the scenarios generated, if Brazil today equaled the female and male participation rate, among young people aged 25 to 29 years, the Brazilian GDP would undergo an increase of 17% in 30 years, considering the permanence of this cohort until the age of 54.
In addition, if Brazil were to instantly raise the schooling of young people entering the labor market (25 to 29 year olds) from 2023 onwards to the level of Chile, GDP would increase by 25% in 30 years. If it reached the level of Korea, the growth would be 55%. If this increase were gradual, that is, if Brazil followed the same pace that Chile has taken to reach its current level of schooling, GDP would rise by 21%. If it followed the same pace as that of Korea, the increase would be 33%. These trajectories are only illustrative and show the productive potential lost by Brazil. Realistically speaking, though, they are not feasible considering Brazil's history of more than 40 years. But what if Brazil adopted two policies that ensured that the chances of a young Brazilian, from the age of 11 up to completing high school, were the same as those of a Chilean; And that the chances of an 18-year-old Brazilian up to completing higher education were also the same as those of a Chilean? The change would begin in 2023 but would only take effect when these 11- and 18-year-olds were to enter the productive phase at the age of 25. In that case, GDP would increase by 14.5%. If we were to use Chileans as a reference, the increase would be 2.2%. This introductory analysis is part of a broad axis of research that IMDS has been developing, aiming to propose debates on the great challenges that affect the social mobility of young Brazilians. To learn more, we invite all readers to explore the material cited in this letter on our website. Until the next “Letter from IMDS”! Paulo Tafner CEO | 
