Title: The Population Problem: New Debates, New Ideas, and New Opportunities
1Evidence on how Population and Reproductive
Health Impact Economic Growth and Poverty
Reduction David Canning Harvard School of Public
Health November 2, 2006
2Theory and Evidence
- Theoretical models tell us what evidence to look
for. - There are many mechanisms that potentially link
population to growth and poverty reduction. - Evidence of a narrow focus in the past on the
effect of population growth rate on economic
growth.
3Theory Population Effects on economic growth
- Malthusian
- exhaustible resources (climate)
- Neo-classical growth theory
- capital dilution
- Positive scale effects
- technological progress and agglomeration
externalities
4Impact of population growth on economic growth
- Use cross-national data.
- Standard finding was of little effect of
population growth on economics growth (NAS Report
1986). - Result still holds today.
5The 1986 Report in Historical Context
- The report was revisionist (Kelley 2001) as
opposed to other population-alarmist reports. - The authors were economists and allowed for
market and institutional mechanisms that may
alleviate the negative consequences of population
growth.
6Critiques
- We have been looking at the wrong level of
aggregation. Many effects may occur only at the
global or city level. - Other theoretical models would make us look at
different evidence. - Test conflates several different effects.
7Other Theories
- Quality- quantity tradeoff
- health and education of children
- Maternal health and productivity
- Female labor market participation
- Transition from family support to saving for old
age - Age structure effects
- Labor supply and saving vary with age.
- Differential effects of fertility, mortality and
migration
8Components of Population Growth
- Population growth can be decomposed into the
crude birth rate, minus the crude death rate,
plus inward migration. - Looking at effects of population growth as a
whole assumes these components have exactly equal
effects - the effect of a birth is the same as an
inward migrant or a death avoided. - The economic impact of changes the birth rate,
death rate, and migration rate are likely to be
very different.
9Mortality and Health
- Low death rates are associated with healthier
populations evidence has emerged for such an
effect in both the micro and macro literature. - It is common to capture health in growth
regressions by life expectancy - This health productivity can be separated from
the population effect
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11Demography and Growth
- Low birth rate and low death rate are both
associated with faster economic growth. - A high (and rising ) ratio of working age to
dependent population is associated with economic
growth. - The effect is robust in growth models and help
forecast economic growth. - Identification timing. Past demography is
uncorrelated with future growth shocks.
12Age Structure and Accounting
- There is an accounting effect of age structure,
where we take age specific behavior to be
constant and look at the effect of a changing age
pattern. - This gives large effects of age structure change
on labor supply and saving. - Age structure can be written as a function of
past fertility, mortality and migration rates.
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15Demography and Saving
- Investment rates in most countries are closely
tied to domestic savings rates. - Savings rates vary with age. Changing age
structure towards the older working age groups
(who have high savings rates) tends to increase
national savings rates. - Macro effects are larger than those found by
calibration based on micro data perhaps due to
the fact that aging populations have longer life
expectancy generating higher savings rates for
retirement at all ages.
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17East Asia Age Structure
18Sub-Saharan Africa Age Structure
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20Interactions
- High rates of growth of the working age
population produce an increase in labor supply. - This supply must be met by demand if it is to be
employed. - We have evidence that the beneficial effects of
age structure change only occur in countries with
good institutions and economic policies - Estimation different from calibration
21Poverty Reduction
- Cross country poverty and inequality data is very
low quality. - Little evidence of an effect of fertility on
inequality in macro data (poor get proportional
benefits). - Some evidence that demographic transition occurs
first among the better off, widening income
inequality. - The poorer families catch up later in the
transition.
22Economic Growth, Welfare, and Population Policy
- We find that lower fertility promotes growth in
GDP per capita. However, GDP per capita is not a
welfare measure. A broader notion of welfare is
required. - If the benefits and costs of fertility fall
entirely on the family, we should aim to achieve
desired fertility. We do not have evidence here
of externalities (need to compare effect within
and across families).
23Poverty Trap
- The temporary boost in GDP per capita due to the
demographic transition may help countries escape
from a poverty trap. - The feedbacks from income, health and education
to fertility are a technical problem for
identifying the direction of causality. - They are conceptually important in understanding
the process of development since they set up a
self reinforcing, positive feedback, system - Points to research on determinants of desired
fertility, and the system, as well as the
consequences of filling unmet need.
24Casual Effects in Microdata
- Determining the effects of mortality, fertility,
and migration pose quite different problems - Desired fertility is a choice and is the product
of a joint decision. - Random shocks (unplanned births, infertility)
identify the effect of fertility on behavior. - Access to family planning for unmet need is a
good instrument as it is also the likely policy
intervention. - Changing desired fertility is likely to have
different effect from providing services to
reduce unmet need.
25Micro Evidence
- Large family size is associated with poverty.
- Few studies try to get at causality
- Twins and sex composition (with male preference)
are not good instruments.
26Microeconomic evidence the economic effects of
lowering fertility determining causality
- Miller, 2005, quasi-random placement of family
planning services in Columbia, effects of womens
education and labor supply. - Joshi and Schultz, 2006, MATLAB family planning
experiment in Bangladesh, effect on child health,
womans health, and income.
27Focus Theory
- Which mechanism (theoretical effect) is to be
focused on? - Can we determine causality rater than
association.