1. Foreseeing supply and demand for competence and education with a regional CGE model
Jouko Kinnunen
Bjarne Lindström
Katarina Fellman
26 August 2015
ERSA, Lissabon

2. Statistics and Research Åland, ÅSUB
The official statistical authority of the Åland Islands
Research institute serving local and other customers
Personnel 10.5 man-years
Annual gross income 0.8 € m.

3. About the study
On behalf of the Åland Government (department of education)
Meant to be used as a decision support for the educational planning in the Åland Islands
The current study was preceeded by an earlier one in 2006 (Palmer and Kinnunen; ÅSUB Report 2006:2)
Analysis is based on a further developed version of the CGE model for Åland first presented in Kinnunen (2005)

4. Outline of the presentation
Short presentation of the Åland Islands
Main results & conclusions
Characteristics of the CGE model
Presentation of scenarios
Presentation of some detailed results
Introduction to PC-Axis result databases

5. Åland, self-governed archipelago region in the middle of the Baltic Sea
Population 29,000
Own flag, parliament, police
90% speak Swedish
Self-governed since 1921; renewal of autonomy act is being prepared; Åland Government is hoping for getting more and new areas of competence transferred from the state to the province.

6. Ålands makes business of the pleasures of others...
Tax free sales on board of passenger ferries in 2013: 249 MEUR, EUR/capita
Internet and other gaming revenues of publicly owned gaming company (paf.com) 78 MEUR, EUR/capita in 2012
Tourism 85 MEUR, EUR/capita in 2013
GDP of Åland in 2012: EUR m. Population in 2014:

7. Åland is one of the most prosperous regions in Finland
GDP per capita, euro in year 2000 prices
Source: Statistics Finland

8. Population growth 1990 = 100

9. Åland is responsible for the local educational policies
16 municipalities organize primary education
Secondary education: preparatory and vocational within a single school
Technical university, tertiary education:
Business Administration
Electrical Engineering
Health and Caring Sciences
Hospitality Management
Information Technology
Marine Engineering
Navigation

10. Main future trends
Ageing: increasing departures from labour market, population grows more than labour supply
Low growth in labour demand in total
Increasing demand for service personnel (trade, health care)
Lower participation rate in the future labour market
Non-traded sector of economy grows
Demand for higher-skilled labour (post-secondary educ.) grows more than that of low-skilled labour
Female occupations have higher growth in demand than the traditional male ones
Men tend to undereducate themselves, the opposite applies for women

11. Main conclusions
Education in Åland covers rather well the labour market needs regarding low-skilled (secondary level) labour
Higher nr of graduates will be needed within non-traded service sector (health care, trade other services) and within IT services
Highly skilled labour is mainly imported (incl. return migrants) – migration very important
Challenges:
Flexibility
Structural adjustment
Policy coordination

12. CGE model for Åland Based on IFPRI Standard Model Recursive dynamics
Imperfect competition
Detailed demographics
Endogenous participation rate
Philips-curve type wage dynamics
Endogenous migration
Public demand driven by population size and age structure
Household demand affected by the age structure as well

13. Dimensions of the model
One aggregate hhd (in submodule 8 hhds with different consumption parameters; grouped by age of ref.person)
2 tourist hhds: Finns, RoW tourists
Public sector: state, regional gov, municipalities, social security funds
15 industries, 17 commodities
11 tax/subsidy accounts
2 types of labour: low- and high-skilled

14. Shall we have a look into the future?
Back to Future #1 Michael J. Fox and Christopher Lloyd

15. Three paths to future
Base scenario: continuation of past developments, with some new ones:
Sulphur directive: higher fuel costs for sea transport
Higher municipal taxes, low increases in transfers from state to government and from government to municipalities
Increasing demand for specialist occupations
Ageing increases private demand for health care services
Growth: higher external demand for Åland’s exports, higher productivity growth, higher participation rates among workers 45+, increasing local competition, higher inmigration flows
Deceleration: even higher fuel costs than under base, low external demand, lower productivity growth, lower inmigration, same participation rates than under base

16. Population

17. Net migration
Persons

18. GDP

19. Dependency ratio, % (20-64)

20. Employment of Ålanders

21. Participation rate 15-74 years

22. Labour market exits

23. Recruiting need by gender and labour type Base scenario
Recruiting need = change in labour demand + labour market exits

24. Recruiting need by occupation, yearly averages, base scenario

25. Recruiting need by field of education, base scenario

26. Share of recruiting need covered by local graduations, per cent
Year

27. Detailed results are accessible on the web as PC-Axis matrices...
PC-Axis files in English

28. Thank your for your interest!
CRESCAT SCIENTIA – VITA EXCOLATUR LET KNOWLEDGE GROW, LET LIFE BE ENRICHED Låt vetenskapen växa och livet berikas
Thank your for your interest!