and investment may also rise because rising working-age population shares are often associated with declining shares of children in total populations. Since there are fewer children to support, there can be greater consumption as well as investment. Third, it can lead to faster productivity growth since households might have more resources to invest in fewer children. Labor supply may also expand since mothers with lighter childrearing responsibilities may find it easier to enter the labor market.

These age-structure impacts on development are often classified as either a first or a second demographic dividend (Lee and Mason 2006; World Bank 2015a). The first demographic dividend is often associated with rising working-age population shares. As such, it could persist for decades but is ultimately transitory. Estimates suggest that the first demographic dividend explains between 9.2 to 15.5 percent of per capita economic growth over the 1960–2000 period for some countries (Mason and Kinugasa 2008). Indeed, an increase of 1 percentage point in the working-age population share is estimated to boost GDP per capita growth rates by 1.1 to 2.0 percentage points, on average (Cruz and Ahmed 2016; World Bank 2015a).<sup>5</sup> The second demographic dividend arises if changes in age structure create space for higher savings and lead to increased investment in human and physical capital. These decisions subsequently influence the productivity of the workforce. An increase of 1 percentage point in the share of the working-age population is associated with an increase of 0.6 to 0.8 percentage point in savings (Cruz and Ahmed 2016; World Bank 2015a). National private-savings rates have been found to depend on the age composition of the population: individuals are typically net savers when they are working age, but they tend to be predominantly consumers when they are children. This outcome is associated with the second demographic dividend, where declining dependency ratios, led by a lower share of children in the population, tend to boost domestic savings and investment (e.g. Kelley and Schmidt 2005, Higgins 1998, Higgins and Williamson 1997, and Kinugasa and Mason 2007).

The causality underpinning the association between working-age population shifts and development can thus be seen to be complex and occurring through multiple pathways, including through an increase in the supply of workers relative to the total population; a rise in the capacity to save, which leads to a higher capital per worker ratio; and more investment in human capital. While these channels can work simultaneously, the differentiation between the first and second dividends is informed not only by the transmission mechanisms but also by the time horizon through which they are at work. It may very well be the case that a country is already successfully realizing the second dividend even before it has completely exhausted the first dividend.

With the mechanisms of the first and second demographic dividends in mind, the question now arises: what do the age-structure shifts in SACU economies mean for their development?

> 5 The extensive literature on this includes but is not restricted to Bloom and Williamson (1998), Bloom et al. (2009), Bloom and Canning (2004), Higgins and Williamson (1997), Eastwood and Lipton (2011), Kelley and Schmidt (1995, 2005, 2007), and Rosenzweig (1990). These studies all suggest that growth in the working-age population share is associated with higher per capita income growth.

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