Population and Economic Growth

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Chapter 4

• Population and Economic Growth

Augmented for econ337 fall 05 by S. Colt
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Main conclusions of Malthus model

• Technological progress ?
• More people

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Population Growth in Solow (Capital) model

• Pop growth causes capital dilution
• Unless there is a higher investment rate, higher
  pop growth leads to lower income, same effect as
  if depreciation was higher
• Magnitude of the effect? Low to medium

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Demographic Transition

• High birth rate, high death rate low growth
• Mortality drops high growth
• Fertility drops low growth

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Stage 2 mortality decline

• Nutrition
• Public Health (avoiding disease)
• Medical advances

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Stage 3 fertility decline

• Means (contraception methods)
• Ends (fewer desired children)
• Costs of additional children
• Benefits of additional children

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Desired fertility compare marginal benefit to
marginal cost

• Think about the additional child
• Child as labor/helper
• Child as source of pleasure
• Child as recipient of caring

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Child as laborer-helper

• Dasgupta
• Gatherer
• Easterly
• Social insurance
• Children switched from being timesavers
  (substitutes) to timesinks (complements), and
• Oppty cost of time, esp. womens time, went up

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Child as old-age insurance

• When other forms of social insurance become
  available, the benefit of having children around
  to take care of you in old age drops

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Opportunity cost of womens time

• As opportunities for wage labor outside the home
  increase, the opportunity cost of time spent
  caring for children goes way up.

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Quantity Quality Shift

• Increased probability of survival for any one
  child
• Inreased economic return to the children from
  investment by parents esp. in education.

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