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What is CESS?
CESS-Cigány Economy Simulation System
Hector McNeill1
CESS is an econometric model based upon a SPF-Structural Production Function. It calculates the opportunity cost of the inadequate provisions of primary & secondary education and vocational training in Hungary. It also provides ways of simulating the outcomes of different policy actions to remedy the situation.
Fuzzy statistics
There is a considerable amount of official denial concerning Roma population statistics. To some extent this is justified on the basis of legislation which does not require that the race of an individual be identified on official forms, and that use has been made of a principle of "declaration", that is, people declare what their race or ethnicity is only if they so desire. As a result official statistics enabling the effective separation of population groups are hard to come by. This does not mean that various means are not still applied by government agencies to monitor different ethnic groups, for example through household "surveys" see below.
On the other hand, all local communities know very well the breakdown in their communities between Roma and non-Roma. The majority of Hungarian communities, over 5,000 of them, are very small villages. The selection of rural Roma children for Special schools, some of whose whole complement is made up of Romani children, is proof enough that such accurate identification is a continual process involving central and local governments.
In any case, at the national level, very accurate surveys were completed before the legislation requiring declaration of ethnicity, came into force. Estimates for Roma population growth rates have also beed estimated with some accuracy up until 1985. This note describes the methodologies used to achieve two first steps in the establishment of a functional model:
- the creation of population projections for Roma and non-Roma
- quantification of the shortfalls in Gross National Product associated with earning capacity decifits
The objective of the CESS is to start off by determining the order of magnitudes of relative population sizes and growth rates. Having determined the order of magnitude of Roma and non-Roma populations and their growth rates we can then apply various "overlay" analyses which help us determine the highest-likelihood location of the true figures. The highest-likelihood analysis will be described in another briefing note. This approach proved to be completely accurate in the case of the determination of Special school populations which we carried out based on ECRE field data collected in 2001-2003.
Historic Roma data
The historic trend in the growth in the size of any population as measured by the difference between birth rates and death rates. The historic growth rate for the Roma in Hungary is some 2% p.a. This was confirmed by the Hungarian Academy of Science data describing a detailed survey carried out in 1984 and published in 1989. See the box in annex. The sustained growth rate of 2% per annum has been maintained in the face of a death rates which vary around 16/1000.
Historic National data (Roma plus non-Roma)
The national average death rate is some 13/1000 and the national average birth rate is some 10/1000. These national statistical averages are the weighted sum of the non-Roma birth rate (nRbr) and Roma birth rate (Rbr) and the weighted sum of the non-Roma death rate (nRdr) and Roma death rate (Rdr).
Therefore the first problem is to separate the two subsets of the population, Roma and non-Roma and quantify their respective birth and death rates.
National, Roma & non-Roma birth rates
The national Hungarian birth rate (nbr) is 10/1000. This is the weighted sum of the subset birth rates. Thus 10 = (nRbr x non-Roma population)/total national population + (Rbr x Roma population)/total national population
We know, for example, from forward projections that in 2006 out of a total population of 10 million the Roma constituted some 780,000. Substituting these figures into the equation we end up with:
10 = nRbr(9,220,000)/10,000,000 + Rbr(780,000)/10,000,000
To sustain a 2% net annual population growth rate against a death rate of 16/1000 the Romani birth rate needs to have been 36/1000 (36/1000-16/1000=20/1000 = 2%). Substituting this figure into the remaining equation gives:
10 = nRbr(9,220,000)/10,000,000 + 36(780,000)/10,000,000
10 = nRbr(0.922) + 2.808
nRbr = (10 - 2.808)/0.922 = 7.8
So the initial estimates of the Roma and the non-Roma birth rates are 36/1000 and 7.8/1000.
National, Roma & non-Roma death rates
Death rates nRdr and Rdr can be calculated in the same way. The national average is some 13/1000 thus:
13 = nRdr(9,220,000)/10,000,000 + 16(780,000)/10,000,000
13 = nRdr(0.922) + 1.248
nRdr = (13 - 1.248)/0.922 = 12.75
So the initial estimates of the Roma and the non-Roma death rates are 16/1000 and 12.75/1000.
Relative population growth rates
Based on the figures isolated above the total Roma population, as we know is increasing at the rate of 2% p.a. On the other hand the total non-Roma population is descreasing at the rate of 10-12.75 = 2.75/1000, that is -0.275%/annum.
Because, currently, the non-Roma subset makes up roughly 92% of the population, the fall in population outweighs the overall positive contribution from the growth in the Roma population. For example for 2006 the drop in total population caused by the non-Roma subset is 9,220,000 x 0.00275 = -25,355 and against this can be set the gain from the Roma subset of 780,000 x 0.02 = 15,600. This results in an estimated drop in total population of 9,755. We know that the drop is more than this but the downward trend varies continuously as the birth and death rates vary. In reality the drop in population, related to variations on birth and death rates amongst the non-Roma subset can see annual drops vary from between 10,000 and up to 50,000.
Terms used (sooner or later as the CESS model develops)
Human resources planning
By human resources planning we refer to the process of providing adequate freedom to all to participate in the labour markets either to participate as employees, to run own businesses employing others or to work as an individual in some contractual or other money earning capacity.
Basic education
The provision of an adequate freedom for each individual to pursue interests and way of life and work which enables them to provide for themselves, a partner, constitute a family and ensure that offspring enjoy equal opportunities, is founded in an adequate basic education. A basic education helps individuals achieve useful capabilities in literacy, numeracy and expression as well as specific information and knowledge on a range of subjects.
ser - school entry rate
The ser is the number of children entering primary school normally at around the age of 6, thus for any year the ser is the number of children born in the year n-6 where n is the current year.
Vocation and technical training
People with a basic education can ensure more freedom of choice in the labour market by completing vocational and technical training either in appropriate institutions or as apprentices learning on the job. However, in all cases an adequate basic education is an essential to qualify for such training. It is also an essential facilitator of easing communications within such training environments with individuals being able to complete a range of tasks based largely upon the benefits derived from their basic education (reading, writing, expression, numeracy, handling documents).
vter - vocational training entry rate
The vocational training entry rate is normally (but this can vary with types of training) the proportion of children applying and qualifying for such training and who were born in the year n-16 where n is the current year.
The labour market
The new entrants to the labour market, individuals who have recently left school or vocational training establishments representing a constant flow of individuals.
Capabilities and earning capacity
The performance of the economy depends on a workforce which having adequate skills and with experience capabilities to achieve a significant contribution in terms of value added. This is turn determines the earning capacity of the individuals.
Size and structure of workforce
Like the population in general the labour market has an entry rate (Lmer) (equivalent to the birth rate) and a retirement rate (Lmrr) associated with the point in time when an individual retires from active participation in the labour market (like the death rate). The size and make-up of this flow is directly related to the birth rate of the subset to which the individual belongs.
Lmer - Labour market entry rates
The labour market entry rate is n-16 less those who have entered vocational training plus those who have just left vocational training.
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The word cess is an old English term for tax or fiscal buden
1 Hector McNeill is the Systems Co-ordinator at the Systems Engineering Economics Lab, Portsea Isle, Hampshire.