Population Growth and Economic Development: Causes, Consequences, and Controversies

Lecture 7

The Basic Issue: Is Population Growth Good or Bad?

1. Argument:– Population is a serious problem in developing countries?

2. Theories:– Demographic transition– Malthusian model– Microeconomic theory of fertility

3. Facts:– Some empirical evidences

4. Policies:– What can developing countries do?

1.1 Population Growth Is A Problem!

• Population and the Global Crisis

– Poverty, low levels of living, malnutrition, ill health, environmental degradation, etc.

• Population-poverty cycles

– Population growth, saving, per capital income growth

• 7 Negatives

– Lower Y per head

– Poor people bear burden of population growth

– Large population limits educational opportunities

– Health of women is harmed

– Family food is limited

– Environmental degradation occurs

– Illegal international migration and over urbanization

1.2 Population Growth Isn’t A Problem!

• Other Issues

– Underdevelopment

– Resource Depletion and Environmental Destruction

– Population Distribution

– Subordination of Women

• False Issue

– Neocolonial dependence theory

• Desirable

– Consumer Demand

– Economies of Scale

– Labor Supply (sufficient-low cost)

– Non-economic reasons

2.1 The Demographic Transition

• Stage I: high birthrates and death rates

• Stage II: continued high birthrates, declining death rates

• Stage III: falling birthrates and death rates, eventually stabilizing

2.2 The Malthusian Model

Criticisms of Malthus’ model

2.3 The Household Model

• The microeconomic household theory of fertility

Demand for Children Equation

nxtPPYfC xxcd ,...,1),,,,(

WhereCd is the demand for surviving childrenY is the level of household incomePc is the “net” price of childrenPx is price of all other goodstx is the tastes for goods relative to children

Demand for Children Equation

nxtPPYfC xxcd ,...,1),,,,(

0Y

Cd

0

c

d

P

C

0

x

d

P

C

0

x

d

t

C

Under neoclassical conditions, we would expect:

3.1 Population Growth: Numbers

3.2 Population Growth: Structures

3.3 Population Growth: Relations

– Population growth & income– Population density & income– Population growth & structure (Number &

Structure) – Producer & consumer

Income and Population Growth

y = -8E-05x + 2.088R2 = 0.3562

y = -0.6778Ln(x) + 7.1688R2 = 0.4948

-2

-1

0

1

2

3

4

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

GNI PPP per capita (1999 US$)

Popu

latio

n N

atur

e G

row

th R

ate

%Series1Linear (Series1)Log. (Series1)

Source: Population Reference Bureau, 2001 World Population Data Sheet, (N=158)

Income and Population Density

y = 0.0953x + 82.548R2 = 0.0272

y = 687.84Ln(x) - 4940.3R2 = 0.0256

-10000

0

10000

20000

30000

40000

50000

60000

0 5000 10000 15000 20000 25000 30000 35000 40000 45000

GNI PPP per capita

Series1

Linear (Series1)

Log. (Series1)

Source: Population Reference Bureau, 2001 World Population Data Sheet, (N=158)

4. Some Policy Approaches

• What developing countries can do:– Long run: increase the price of child

• opportunity cost of mother’s time• Cost of educating child

– Short run: control fertility• Persuade people• Family-planning programs• Economic incentives and disincentives• Redistribute population• Coerce people• Raise women’s social and economic status

0

c

d

P

C