Overview of Population Forecasting for Small Areas.

Population projections are intended to identify and chart the possible effects of influences and contingencies that determine future population size. This paper considers three critical ingredients for future-oriented demographic analysis applied to small areas: (1) Familiarity with the logic and limitations of each projection method. The logic of trend extrapolation, component analysis, and labor market forecasting models is described, and new evidence is presented on the comparative performance of the first and last of these approaches. (2) Informed judgment about the assumptions on which a projection or forecast has been based. Forecasting is least effective when it is conducted as an exclusively mechanical process. (3) Continual reappraisal of those assumptions and revision when necessary. The fact that precise forecasts of population growth and structure are made should not obscure the uncertainty which surrounds these assumptions. All such assumptions have a limited life expectancy, and the judgments on which they rest must be reexamined continually. 20 pp.