1. AGEC 640 Agricultural Development and Policy Thursday, August 31, 2017
Last class
Farm and food problems: the development paradox and structural transformation
Today
Mouths to feed, farmers to employ: population growth and demographic transition
Next week: farm households’ response

2. Drivers of Change: Population growth and economic transformation
Last class:
broad diversity of policy problems and policy actions, but also
strong regularities (“stylized facts”):
the development paradox, from taxing to subsidizing farmers
the structural transformation, from farm to nonfarm activity
Today:
a key driver (from outside, exogenous to agriculture) is demography:
the demographic transition
from large to small families
high to low death rates and birth rates
high to low fraction of people who are children
…and other corresponding changes

3. Demographic transition
A pattern of steadily increasing population growth, followed by a period of slowing population growth. Generally indicated as an S-shaped curve for population through time.

4. ? 1 2 3 4 Frank Notestein (b. 1945) Three stages of population growth
1. High growth potential
2. Transitional growth
3. Incipient decline
we might add…
4. Sustained decline?
pop ? 1 2 3 4
time

5. 1. High growth potential
Pre-industrial Birth rate high (25-40/1000) Death rate high Life expectancy short Population growth low but positive Widespread misery

6. 2. Transitional growth
Early industrial Birth rate remains high (or rises!) Death rate low and falling Life expectancy rises Population growth is “explosive” Mortality declines before fertility due to better health, nutrition, and sanitation

7. 3. Incipient decline
Industrial Birth rate drops due to desires to limit family size (female education, empowerment and employment) Death rate low and stable Life expectancy high Population grows until birth rate = death rate Characterized by higher levels of wealth and reduced need for large families for labor or insurance.

8. A stylized model of a demographic transition
The gap between birth and death rates is the population’s “rate of natural increase”
(≈ population growth)
CDR = crude death rate CBR = crude birth rate

9. An actual demographic transition
Sweden’s population growth rate peaked at about 1.5% per year, in the late 19th century
Spikes in CDR reflect a series of bad harvests and a dysentery epidemic in 1773

10. A different demographic transition
The second wave of the 1918 influenza reaches Africa in September 1918
Mauritius’ peak pop. growth rate was over 3%/year, twice that of Sweden, because its death rate fell so fast…

11. A third kind of transition
Mexico’s peak population growth was even faster, because its birth rate fell slowly…

12. Birth and death rates depend in part on
age structure and “population momentum”

13. Reprinted from www.census.gov/ipc/www/idb.
A very young age structure: the population pyramid for Nigeria 1980, 2000, 2020
Reprinted from
AGEC Fall 99

14. A later stage of demographic transition: population pyramids for Indonesia 1980, 2000, 2020
Reprinted from
Indonesia has a much more “mature” population pyramid than Nigeria
AGEC Fall 99

15. The final stage of demographic transition: population pyramids for the United States 1980, 2000, 2020
Reprinted from
The population “ages”, with
tiny echoes of the post-WWII baby boom
AGEC Fall 99

16. The lower-income regions have had a later (and much faster
The lower-income regions have had a later (and much faster!) demographic transition

17. Africa’s pop. growth has been of unprecedented speed and duration, but is now slowing

18. Africa’s child dependency has been similarly unprecedented, and is now improving10 20 30 40 50 60 70 80 90
100
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
No. of children (0-14)
per 100 adults (15-59)
E. Asia
S. Asia
Sub-Sah. Africa
Whole World
Source: UN Population Division, World Population Prospects: The 2000 Revision (

19. Explaining the demographic transition
What can account for the patterns we’ve seen, including especially the late and rapid demographic growth and child dependency in poor regions?
Will look first at mortality decline,
then fertility decline…

20. The age structure of mortality decline

21. The HIV/AIDS tragedy

22. Explaining the mortality decline (UK data)
General improvements in: overall well-being education female literacy diet, water and sanitation Not, medical breakthroughs…!

23. Explaining the mortality decline (US data)

24. Explaining the mortality decline?
From Frederiksen, H. (1966) Determinants and Consequences of Mortality and Fertility Trends, Public Health Reports 8(8):

25. Explaining the fertility decline: social policies?
Source: K. Sundstrom. “Can governments influence population growth?” OECD Observer, December 2001, p. 35.

26. Explaining the fertility decline: infant mortality
The fertility decline lags substantially the drop in IM

27. Conclusions on population growth and the demographic transition
Much popular understanding about population growth turns out to be wrong.
In fact, over time and across countries:
population growth starts with a fall in child mortality, which raises population growth initially because the fertility decline happens later
the temporary burst of population growth involves a rise and then fall in the fraction of people who are children
these changes are similar in all countries, but in today’s poor countries they occurred later and faster, with larger magnitude over shorter time period than occurred historically elsewhere
How does the demographic transition affect agriculture?

28. What happens to the number of farmers?28

29. What happens to the number of farmers?
Initially, farmers are much poorer than non-farmers
less capital/worker, lower skills, less specialized
this means agriculture is the “residual” employer… (what is the opportunity cost of labor?)  CARL: Country with Abundant Rural Labor 
The annual change in the number of farmers depends on:
growth in the total population
growth in nonfarm employment

30. Some arithmetic of structural transformation
If we divide the total workforce into farmers and nonfarmers:
Lf = Lt – Ln (Li=no. of workers in sector i)
And solve for the growth rate of the number of farmers as a function of growth in total and nonfarm employment, we see that size of the sectors matters a lot:
%Lf = (%Lt – [%Ln•Sn]) / (Sf) (Si=share of workers in i)
In CARLs, even if nonfarm employment grows much faster than the total workforce, the number of farmers may still rise quickly:
Rate of growth in rural population, by relative size of the sector
proportion of workers
who are farmers (Sf):
3/4
2/3
half
Country is poor but successful:
nonfarm employment growth (%Ln) = 6%,
twice rate of workforce growth (%Lt) = 3%
+2.0%
+1.5%
0.0%

31. The number of farmers rises then falls… until farmers’ incomes catch up to nonfarm earnings
The “textbook” picture of structural transformation within agriculture:
farm numbers stabilized by
off-farm income and rising profits per acre;
latest US census shows slight rise in no. of farms
Figure 5-3. Number and average size of farms in the United States,

32. In very rich countries, the number of farmers does not keep falling to zero!
In the Harris-Todaro model of migration, farmers move to cities if nonfarm work offers higher expected incomes:
migrate if: Wrural < (Lemployed/Ltotal) x Wurban
An equilibrium at which the number of farmers stays constant would offer equal farm and nonfarm earnings:
Wageoff-farm = Earningson-farm
= Profits/acre x acres/hour
Thus, you can have no change in the number of farmers IFF
profits/acre or
acres/hour rise fast enough to keep up with off-farm wages

33. In the world as a whole, the number of farmers recently peaked and will soon decline
AGEC Fall 99 33

34. Regions differ sharply in their population growth rates
Source: Calculated from FAOStat data (

35. Cities are growing much faster than total population
Source: Calculated from FAOStat data (

36. …but cities are still too small to absorb all population growth, especially in S. Asia and SSA
Source: Reprinted from W.A. Masters, “Paying for Prosperity: How and Why to Invest in Agricultural R&D in Africa.” Journal of International Affairs 58(2):

37. Conclusions on economic growth and structural transformation
As incomes grow…
Farming declines as a fraction of the economy
in favor of industry and services
even within agriculture
Farmers’ incomes at first decline relative to others
but then farm incomes catch up…
until farm incomes equal or pass non-farm incomes
The number of farmers first rises and then falls
speed and magnitude depend on both population and income growth
eventually the number of farmers stabilizes
in the future, the number of farmers may even rise!

38. More conclusions…
Demographic transition and structural transformation interact, causing a rise and then a fall in the number of farmers.
Today’s developing countries have had very fast decline in death rates, leading to unprecedented rate of population growth.
For CARLs, small shares of (urban) population in nonfarm employment, lead to rapid rural population growth and declines in land available per farmer.
The rural effect is compounded by a shift in age structure:
first, more children/adult (the “demographic burden”),
then, more child-bearing women (“population momentum”),
then more working-age adults (the “demographic gift”)
These are powerful drivers of change in agriculture and in agricultural policy, but occur slowly and are often ignored!