Economic

Development, 12th Ed.

M. P. Todaro and S. C. Smith
Slides for Chapter Six

Updated and Expanded

Stephen C. Smith
Fall 2017
ssmith@gwu.edu
 6.1 The Basic Issue:
PopulaGon Growth and the Quality of Life
•  Six major issues:
–  1. Will developing countries be able to improve
levels of living given anGcipated populaGon
growth?
–  2. How will developing countries deal with the
vast increases in their labor forces?
–  3. How will higher populaGon growth rates affect
poverty?
 6.1 The Basic Issue:
PopulaGon Growth and the Quality of Life
•  Six major issues (conGnued):
–  4. Will developing countries be able to extend the
coverage and improve the quality of health care
and educaGon in the face of rapid populaGon
growth?
–  5. Is there a relaGonship between poverty and
family size?
–  6. How does affluence in the developed world
affect the ability of developing countries to
provide for their people?
 6.2 PopulaGon Growth: Past, Present, and Future

•  Structure of the world’s populaGon

–  PopulaGon growth in history
–  Geographic region
–  FerGlity and Mortality Trends
–  Rate of populaGon increase
–  Birth rates, death rates , Total ferGlity rates
–  Age Structure and dependency burdens


Table 6.1 EsGmated World PopulaGon Growth
Figure 6.1 World PopulaGon Growth, 1950-2050
Figure 6.2 World PopulaGon DistribuGon by Region, 2010 and
2050
 Larger than any developed country when developing…
Developing Countries between ~50-250 million population*
–  Korea, Rep. 50.617045
–  Myanmar 53.897154
–  South Africa 54.95692
–  Tanzania 53.47042
–  Thailand 67.959359
–  Congo, Dem. Rep. 77.266814
–  Turkey 78.66583
–  Iran, Islamic Rep. 79.109272
–  Egypt, Arab Rep. 91.508084
–  Vietnam 91.7038
–  Ethiopia 99.39075
–  Philippines 100.699395
–  Mexico 127.017224
–  Russian Fed. 144.096812
–  Bangladesh 160.995642
–  Nigeria 182.201962
–  Pakistan 188.924874
–  Brazil 207.847528
–  Indonesia 257.563815
–  *Note 1: China, not included, has 10 provinces in the ~50-100 million populaGon range
–  *Note 2: India, not included, has 10 states in the ~50-200 million populaGon range
Figure 6.3 Map with Country Sizes ProporGonal to Their FracGon
of World PopulaGon
Table 6.2 FerGlity Rate for Selected Countries, 1970 and 2009
 6.2 PopulaGon Growth: Past, Present, and Future

•  The Hidden Momentum of PopulaGon Growth

–  High birth rates cannot be altered overnight
–  Age structure of developing country populaGons
Figure 6.4 PopulaGon Pyramids: All Developed and Developing
Countries and Case of Ethiopia
 6.3 The Demographic TransiGon

•  Stage I: High birthrates and death rates

•  Stage II: ConGnued high birthrates, declining
death rates
•  Stage III: Falling birthrates and death rates,
eventually stabilizing
Figure 6.5 The Demographic TransiGon in Western
Europe
Figure 6.6 The Demographic TransiGon in Developing
Countries
 6.4 The Causes of High FerGlity in Developing Countries: The
Malthusian and Household Models

•  The Malthusian PopulaGon Trap

–  The idea that rising populaGon and diminishing
returns to fixed factors result in a low levels of
living (populaGon trap)
Figure 6.7 The Malthusian PopulaGon Trap
 6.4 The Causes of High FerGlity in Developing Countries: The
Malthusian and Household Models (cont’d)

•  CriGcisms of the Malthusian Model

–  Impact of technological progress
–  Currently no posiGve correlaGon between
populaGon growth and levels of per capita income
in the data
–  Microeconomics of family size; individual and not
aggregate variables
Figure 6.8 How Technological and Social Progress Allows
NaGons to Avoid the PopulaGon Trap
 Why we conGnue to study the Malthusian trap
•  First, many have impression it holds in poor countries today, despite recent
evidence; people working in the development field should understand the
model – and elements of it that do not currently apply – so they can engage the
debate effecGvely
•  Second, it seems clear that such traps have occurred in the historical past;
possible factors in populaGon collapses, including in the pre-Columbian
Americas.
•  Third, reasons that this model no longer applies underline the importance of
factors that can prevent its (re-) emergence. These include:
•  i) Efforts to sustainably raise agricultural producGvity
•  ii) Increasing women’s empowerment and freedom to choose—along with
increases in their incomes—which reduce the old-age security moGve behind
high ferGlity.
•  We examine populaGon policy analysis in more detail shortly...
 6.4 The Causes of High FerGlity in Developing Countries: The
Malthusian and Household Models (conGnued)

•  The Microeconomic Household Theory of

FerGlity
•  The Demand for Children in Developing
Countries
–  First two or three as “consumer goods”
–  AddiGonal children as “investment goods”:
–  Work on family farm, microenterprise
–  Old age security moGvaGon
Figure 6.9 Microeconomic Theory of FerGlity: An IllustraGon
6.4 The Causes of High FerGlity in Developing Countries: The
Malthusian and Household Models (cont’d)

Demand for Children Equation

Cd = f (Y, Pc, Px, tx ), x = 1,..., n

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
 6.4 The Causes of High Fertility in Developing
Countries: The Malthusian and Household Models
“Demand for Children” Equation

Cd = f (Y , Pc, Px, tx ), x = 1,..., n

Under neoclassical conditions, we would expect:
u The higher the household income, the greater the demand for children
u The higher the net price of children, the lower the quantity demanded.
u The higher the prices of all other goods relative to children, the greater the
quantity of children demanded.
u The greater the strength of tastes for goods relative to children, the fewer
children demanded.
Outside scope of class but: In symbols these relationships may be written as:

∂Cd ∂Cd ∂Cd ∂Cd

>0 <0 >0 <0
∂tx
∂Y ∂Pc ∂Px
 6.4 The Causes of High FerGlity in Developing Countries: The
Malthusian and Household Models (cont’d)

•  Some empirical evidence

•  ImplicaGons. FerGlity lower if
–  Raise women’s educaGon, role, and status
–  More female nonagricultural wage employment
–  Rise in family income levels
–  ReducGon in infant mortality
–  Development of old-age and social security
–  Expanded schooling opportuniGes
–  In addiGon, social norms and ferGlity expectaGons can
play significant roles
 Consequences of High FerGlity: Some ConflicGng PerspecGves 1
PopulaGon growth: “It’s Not a Real Problem”

•  “The real problem is not populaGon growth but the following”:

•  Underdevelopment
•  World resource depleGon and environmental destrucGon
•  PopulaGon DistribuGon
•  SubordinaGon of women
•  “OverpopulaGon is a Deliberately Contrived False Issue”
•  “PopulaGon Growth is a Desirable Phenomenon”
Consequences of High FerGlity: Some ConflicGng PerspecGves 2:
“PopulaGon Growth Is a Real Problem

•  Extremist arguments
•  TheoreGcal arguments
•  Empirical arguments
•  Lower economic growth
•  Poverty
•  Adverse impact on educaGon
•  Adverse impact on health
•  Food issues
•  Impact on the environment
•  FricGons over internaGonal migraGon
 Goals and ObjecGves:
Toward a Consensus
•  Despite the conflicGng opinions, there is some common
ground on the following:
–  PopulaGon is not the primary cause of lower living levels, but may
be one factor
–  PopulaGon growth is more a consequence than a cause of
underdevelopment
–  It’s not numbers but quality of life
–  Market failures: potenGal negaGve social externaliGes
–  Voluntary decreases in ferGlity is generally desirable for most
developing countries with sGll-expanding populaGons
–  One issue could be mulGple equilibria
 Reinterpreting Figure 4.1 Multiple Equilibria: Reinterpret x-axis as
expected number of children in other families, y-axis as one family’s best
response to this expected number of others in its own fertility choice. D3
could be nine children and D1 could be two children each
 Further discussion of “Figure 4.1 reinterpreted”:
On the potential responses of the fertility level of a typical
family to expected fertility of others
•  S-shaped curve may apply (reprise, next slide)
•  Upward slope (complementarity) may reflect the impact
of social norms about fertility
•  The curve increasing at an increasing rate may be due to:
•  -Response to negative impact of average fertility on
wages, and/or,
•  -Response to negative impact on probability any one child
will get modern sector employment
•  -Presence of older children who can take care of younger
•  The curve subsequently increasing at a decreasing rate
may be due to:
•  -Impact on supply of education and health goods
•  -Costs of raising more children rising relative to benefits
 Market Failure Arguments for
Population Policy
•  Coordination failures (“Figure 4.1 Reinterpreted)
•  Costs to growth
•  Environmental impacts
•  Information lags
•  Financial market failures
•  External costs imposed by individual family
status seeking
•  There are sociological factors (importantly social
norms and status)
Goals and ObjecGves: Toward a Consensus

•  Some Policy Approaches

–  Aqend to underlying socioeconomic condiGons
that impact development
–  Family planning programs should provide
educaGon and technological means to beqer
regulate ferGlity
–  Consider policy in light of market failures
–  Tailor policy design to underlying (broadly
speaking, economic, or socio-economic) behavior
–  Developed countries have responsibiliGes too
 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
 6.6 Some Policy Approaches
•  What Else Developing Countries Can Do
–  Persuasion through educaGon
–  Family planning programs
–  Address incenGves and disincenGves for having children through the
principal variables influencing the demand for children
–  Coercion is not a good opGon
–  Raise the socioeconomic status of women
–  Increase employment opportuniGes for women (increases opportunity
cost of having more children, as in microeconomic household theory)
 6.6 Some Policy Approaches
•  What the Developed Countries Can Do
Generally
–  Address resources use inequiGes
–  More open migraGon policies
•  How Developed Countries Can Help
Developing Countries with Their PopulaGon
Programs
–  Research into technology of ferGlity control
–  Financial assistance for family planning programs
 Concepts for Review
•  Birth rate •  Natural increase
•  Death rate •  Net internaGonal migraGon
•  Demographic transiGon •  PopulaGon-poverty cycle
•  Doubling Gme •  PopulaGon pyramid
•  Family-planning programs
•  Rate of populaGon increase
•  FerGlity rate
•  ReproducGve choice
•  Hidden momentum of populaGon
growth •  Total ferGlity rate (TFR)
•  Life expectancy at birth •  Under-5 mortality rate
•  Malthusian populaGon trap •  Youth dependency raGo
•  Microeconomic theory of ferGlity
•  Mortality rate