The second and third alternative scenarios address the issue of educational improvements in attainment and quality. The faster productivity growth scenario considers the case of average annual labor productivity growth rates in SACU economies being higher by 0.5 percentage point. The idea is that improvements in the quality of education leads to workers being more productive, even with the same rates of educational attainment. In contrast, the education convergence scenario assumes that the educational attainment rates accelerate as much as necessary to allow the skill-share of SACU labor forces to converge to that of richer economies. Skill shares in Botswana, Namibia, and South Africa are assumed to converge to that of highincome OECD economies by 2050; while the skill shares in Lesotho and Swaziland converges to that of upper-middle-income countries. These scenarios can be interpreted as representing the cases where households invest more in the education of their children since they have fewer children on average in the future (as they undergo demographic transition), further reflecting the quality-quantity trade-off decision described by Becker (1960) and Becker and Lewis (1973).

The fourth scenario considers the issue of changes in child and aged dependency ratios affecting the savings behavior of SACU households. Specifically, the declining child dependencies should be accelerating savings shares while aged dependencies should be decelerating savings shares. In this scenario, an alternative set of coefficients from Loayza, Schmitt-Hebel, and Servén (2000), based on the full sample of countries, are applied to the model’s savings function. The alternative coefficients allow for declining child dependency ratios to boost savings even more than the baseline, while rising aged dependency ratios have a smaller impact. This can be interpreted as representing the cases where households save the additional disposable income they have due to fewer dependents instead of consuming it, representing a change in behavior.

This scenario also serves the valuable purpose of providing a sensitivity analysis to the importance of demographic change on savings and investment behavior in the African context. High child-dependency or aged-dependency ratios are generally associated with lower savings shares of GDP from the empirical literature. However, evidence from Canning, Raja and Yazbeck (2015) suggests that in the African context, there does not appear to be clear evidence of rising working-age population shares (consistent with falling child-dependency ratios) leading to higher aggregate savings shares of GDP. The explanation provided is that household incomes in Africa may be too low for additional savings to play a role in capital accumulation.

The fifth and sixth alternative scenarios address the issue of improvements in employment ratios (ER), which lead to accelerations in the growth of the labor supply, to rates greater than that of the working-age population growth rate. The _OECD ER_ scenario considers the case where male and female employment ratios in SACU economies converge to that of the OECD average male and female employment ratios. The average OECD employment ratio for males is 63 percent, while that of females is 51 percent. The _OECD ER with gender parity_ scenario considers the case where the female employment ratio in SACU economies converges to 63 percent – the average ER for males in the OECD. These employment ratios are based on estimates from Oosthuizen (2015). The improvements in gender parity and greater female labor force participation and employment are critically intertwined with the demographic transition process, as described by Bloom et al. (2009), among others. As fertility rates decline, women are able to achieve greater 14