1. EC348 Development Economics
Chapter 6 Lecture - Population Growth and Economic Development: Causes, Consequences, and Controversies

2. The Basic Issue: Population Growth and Quality of Life
Six major issues:
Will developing countries be able to improve levels of living given anticipated population growth?
How will developing countries deal with the vast increases in their labor forces?
How will higher population growth rates affect poverty? Will developing countries be able to extend the coverage and improve the quality of health care and education in the face of rapid population growth?
Is there a relationship between poverty and family size?
How does affluence in the developed world affect the ability of developing countries to provide for their people?

3. Some Main Determinants of Population Growth
Status of women
Social security
Cost of children
Urbanization
Health
Education
Marriage age
Labor force status
We will look at health, education and the role of women in more detail in the next lecture.

4. Estimated World Population Growth

5. World Population Growth, 1750-2050

6. World Population Distribution by Region, 2010 and 2050

7. Population Growth: Past, Present, and Future
Structure of the world’s population
Geographic region
Fertility and Mortality Trends
Rate of population increase
Birth rates, death rates , Total fertility rates
Age Structure and dependency burdens

8. Fertility Rate for Selected Countries, 1970 and 2012

9. Population Growth: Past, Present, and Future
The Hidden Momentum of Population Growth
High birth rates cannot be altered overnight
Age structure of developing country populations

10. Population Pyramids

11. Population Behavior The Malthusian Model
Thomas R. Malthus believed that population would expand as long as food supply allowed
Assumption that the “passion between the sexes” would lead to increased fertility whenever conditions allowed for it  any improvements in living standard (due, for example, to good weather) would end up being reflected in a larger population
Economically, it is as if he assumed that number of children was a “normal good”: any increase in income would be reflected in parents having more children

12. Population Behavior The Malthusian Model
Also, he was writing in a time when the most important input in production – apart from labor – was land
So he also assumed that any increase in population would take place at the expenses of living standards
Since amount of land was fixed, increases in population would ultimately lead to a reduction in the amount of food available
Together with the assumption related to the behavior of fertility, this determines the behavior of population in the Malthusian framework

13. Population Behavior
This movement towards a constant level of income in the model would take place via what Malthus called “positive checks” mechanisms:
If population increased for some exogenous reason, some catastrophe was bound to happen, so that initial level of living standards would end up being restored
Famines, wars, and epidemics would be the mode of operation of Malthus’s “checks”
This is the classic Malthusian idea that population tends to grow at a geometric rate, while food supply tends to grow at an arithmetic rate  in the long run, there’s not enough food available, and “positive checks” are needed to equilibrate population and food supply

14. The Malthusian Population Trap

15. Population Behavior
The gloomy and hopeless predictions of Malthus gave economics its nickname: “The Dismal Science”
It seems that, until the 18th century, most of the world behaved according to the predictions of the Malthusian model: population growth was very limited, and living standards were roughly constant
But during the 18th century and afterwards, some countries started experiencing sustained improvements in living standards and increases in population, without the presence of a countervailing Malthusian mechanism
After the demographic transition, everything changed

16. Population/Definitions
Crude birth rate = # of births/population (in thousand)
Crude death rate = # of deaths/population (in thousands)
Rate of natural increase = Birth rate – Death rate (as percentage)
These rates are affected also by the age distribution of the population, and that’s why they are called “crude”
For example: country A may have a higher crude death rate than country B just because country A’s population has a higher fraction of “old” people
In this case, country A may have a higher death rate even if mortality rates in every single age are lower in country A than in B
To construct measures that are not affected by the age distribution, we can concentrate on age specific mortality rates, life expectancy, or fertility rate

17. Population/Definitions
Infant mortality rate = deaths in the first year of life per 1,000 live births
Other age specific mortality rates can be defined, using only population and number of deaths at some specific age; for example:
Mortality rate at age 18 = # of deaths at age 18/population at age 18
Life expectancy at birth = Expected years of life of an individual if age specific death rates remain constant
Number of deaths during the first 28 completed days of life per 1000 live births in a given year or period. Neonatal deaths

18. Population/Definitions
Similarly, we can define age specific birth rates for women:
Birth rate for women at age 25 = # of births from women at age 25/female population at age 25
Total fertility rate = number of children that a woman is expected to have in her lifetime if age specific birth rates remain constant
Life expectancy and fertility rate do not depend on the age distribution of the population because they are constructed with age specific mortality rates and birth rates, respectively

19. Looking at Some Data http://unstats.un.org/unsd/demographic
Data on Infant Mortality

20. Demographic Transition
One of the most important social changes in the history of humankind is the so called “Demographic Transition”
The demographic transition is a process of change from a situation with high mortality and fertility (and constant population), to a situation with low mortality and fertility
The process is characterized by an initial reduction in mortality rates (increase in life expectancy), followed with some delay by a reduction in fertility rates

21. Demographic Transition
In the interval between the mortality reductions and the fertility reductions, population tends to experience accelerated growth (given the increased rate of natural growth)
All countries that ultimately achieved a high level of economic development went through the demographic transition
Therefore, it is usually thought that the demographic transition is a necessary condition for the onset of the process of economic development

22. Demographic Transition (Stages)
Stage I: High birthrates and death rates
Stage II: Continued high birthrates, declining death rates
Stage III: Falling birthrates and death rates, eventually stabilizing

23. The Classic Stages of Demographic Transition
Note: Natural increase is produced from the excess of births over deaths.
Source: Population Reference Bureau

24. Demographic Transition
Changes in health and fertility have important consequences for investment in education, and this is likely to be the link between the transition and economic growth
This process took place first in some Western European countries, starting in the mid nineteenth century, but today it’s completely widespread (Latin American and Southeast Asian countries experienced it mostly in the pos-war)
The vast majority of people today lives in countries where population is expected to stabilize in the next fifty years

25. Demographic Transition
In reality, more than 60 countries already have fertility rates below “replacement rates” (= 2.1; the level just necessary to keep population constant)
The transition can be described roughly as:
Changes in life expectancy at birth from 40 years to around 70 years
Reductions in total fertility rates from around 6 points to close to 2 points or below
Today it is thought that virtually all countries in the world either have gone or are going through the demographic transition; the only exception are some African countries (Sub-Saharan), which still have very low life expectancy levels

26. Demographic Transition in England
Let’s look at some historical examples
(why the dips?)
Todaro and Snilth, Economic Development Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

27. The Demographic Transition in Western Europe

28. The Demographic Transition in Developing Countries

29. Todaro and Snilth, Economic Development Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

30. Transition: Some Asian Countries
Todaro and Snilth, Economic Development Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

31. Transition: Some Latin American Countries
Todaro and Snilth, Economic Development Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

32. Transition: Some African Countries
Todaro and Snilth, Economic Development Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

33. Some African Countries that Have Not Started the Demographic Transition
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34. The Microeconomic Household Theory of Fertility
The Causes of High Fertility in Developing Countries: The Malthusian and Household Models
The Microeconomic Household Theory of Fertility
The Demand for Children in Developing Countries
First two or three as “consumer goods”
Additional children as “investment goods”:
Work on family farm, microenterprise
Old age security motivation

35. Microeconomic Theory of Fertility: An Illustration

36. Under neoclassical conditions, we would expect:
The Causes of High Fertility in Developing Countries: The Malthusian and Household Models
Demand for Children Equation
Where
Cd is the demand for surviving children
Y is the level of household income
Pc is the “net” price of children
Px is price of all other goods
tx is the tastes for goods relative to children
Under neoclassical conditions, we would expect:

37. The above list provides a framework for policy.
The Causes of High Fertility in Developing Countries: The Malthusian and Household Models
Causes of, and Policy Responses to, High Fertility in Developing Countries: Lessons from Microeconomic Household Models
Fertility may be lowered with:
Improved women’s education, role, and status
Female nonagricultural wage employment
Rise in family income levels through shared growth
Reduction in infant mortality, better health care
Development of old-age and social security plans
Expanded schooling opportunities, lowered real costs
Lowered prices and better information on contraceptives
Direct incentives such as subsidy benefits
Policies that have the effect of reducing boy preference
The above list provides a framework for policy.

38. The Consequences of High Fertility: Some Conflicting Perspectives
Population growth: “It’s Not a Real Problem”:
The real problem is not population growth but the following,
Underdevelopment
World resource depletion and environmental destruction
Population Distribution
Subordination of women
Overpopulation is a Deliberately Contrived False Issue
Population Growth is a Desirable Phenomenon

39. The Consequences of High Fertility: Some Conflicting Perspectives
“Population Growth Is a Real Problem”
Extremist arguments
Theoretical arguments
Empirical arguments
Lower economic growth
Poverty
Adverse impact on education
Adverse impact on health
Food issues
Impact on the environment
Frictions over international migration

40. Goals and Objectives: Toward a Consensus
Despite the conflicting opinions, there is some common ground on the following:
Population is not the primary cause of lower living levels, but may be one factor
Population growth is more a consequence than a cause of underdevelopment
It’s not numbers but quality of life
Market failures: potential negative social externalities
Voluntary decreases in fertility is generally desirable for most developing countries with still-expanding populations

41. Goals and Objectives: Toward a Consensus
Some Policy Approaches
Attend to underlying socioeconomic conditions that impact development
Family planning programs should provide education and technological means to regulate fertility
Developed countries have responsibilities too

42. Some Policy Approaches
What Developing Countries Can Do
Persuasion through education
Family planning programs
Address incentives and disincentives for having children through the principal variables influencing the demand for children
Coercion is not a good option
Raise the socioeconomic status of women
Increase employment opportunities for women (increases opportunity cost of having more children, as in microeconomic household theory

43. Some Policy Approaches
What the Developed Countries Can Do Generally
Address resources use inequities
More open migration policies
How Developed Countries Can Help Developing Countries with Their Population Programs
Research into technology of fertility control
Financial assistance for family planning programs

44. Some More Key Population Terminology
Physiological Attributes (age, gender, ethnicity)
Social Attributes (employment status, income, mobility)
Cohort (group of people sharing a vital element/characteristic e.g. age: 0-5, 6-10, etc.)
Density (no. of people per km2 or mile2)

45. Dependency Ratio Population can be divided into three groups:
1. Below 16 yrs (Youth) (Adult) (Elderly)
Assumption: Adult cohort is “economically active” and must therefore support the other two “dependent” groups
D = (y + e)/a x Where y = number of youths
e = number of elderly a = number of adults
Dependency ratio is therefore an expression of how many people every 100 economically active adults must support
The dependency resources has an effect on public policy. The more dependents, the further resources must be stretched, and when resources are scarce, trade-offs in public spending must occur (with social costs) Give some examples.

47. Addressing the Problems
Population policies
Balancing rural/urban populations
Slowing actual birth rate
Need support of:
Political leadership
Business and commercial interests
Religious leaders
Intellectual and community leaders
Family planning techniques
Sterilization
Abortion
Technology transfer
Medicine and healthcare
Agriculture
Fertility control
Human rights issues
Expand not limit human rights
Problem with coercive measures
Selective birth

48. Concepts for Review Birth rate Death rate Demographic transition
Doubling time
Family-planning programs
Fertility rate
Hidden momentum of population growth
Life expectancy at birth
Malthusian population trap
Microeconomic theory of fertility
Mortality rate
Natural increase
Net international migration
Population-poverty cycle
Population pyramid
Rate of population increase
Reproductive choice
Total fertility rate (TFR)
Under-5 mortality rate
Youth dependency ratio