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Population Growth

Why is rapid population growth in developing countries so often a source of concern for policy
makers and researchers? How does the growth in world population today differ from the
historical increase in population growth in the currently developed countries, say, two centuries

Is population growth harmful or beneficial for development

Empirical association
Inverse relationship, higher average income associated with lower fertility, Sub-Saharan
Africa (4-6 children) vs East Asia, and Latin America (2-3 children)
(Boserup) 19th C development shows high population growth and density needed for
agricultural development
Societies with low population densities practised 'extensive' agriculture those with high
densities practised 'intensive' agriculture
Optimist's view
Population growth provides more genius (Simon)
Popuation increases demand for food, prices rise stimulates farmers to producing more food
But does this inherent 'genius' need human capital investment?
If poor people in poor societies have more children, it's because they think it'll increase their
well-being (Bauer) i.e. having more children is a rational choice
Pessimist's view
1. Malthusian argument:
When wages rise above subsistence increased fertility depresses wage to its biological
minimum endogeneity of population keeps per capita income stagnant.
Fits 14th C 18th C evaluation depends on concentrating on the benefits of being born vs per
capita welfare yardstick.
But do people react to wage rises by increasing fertility? Individuals understand costs of raising
children rises while benefits fall as economic development increases economic development
associated with greater provision of social security such institutions more effective than any
other in lowering fertility rates. People have children for a reason, not just because it's feasible to
have theme.
Economic progress labour participation rises less likely individuals in an extended family
find jobs in the same locality move towards nuclear family costs of child rearing internalised
Such factors mean population growth, if endogenous, is a decreasing function of per capita
I) Assumes decreasing returns to agriculture, since technology advances impossible within model
II) However, we have seen that due to technological change, decreasing returns were overcome!)
2. Resource allocation failure in the form of market failure/externalities ie. The relative price of
goods and services that influence household's decisions about whether to have children are 'wrong'
Costs of children may not be incurred entirely by parents:
I) population growth strains resources, but costs not purely felt by individual families and borne by
society overconsumption
ii) If grandparents raise children parents get benefits but less costs
3. Solow model, augmented with population growth,
Higher n lower k*, lower y*, lower c*, also lower Y
Pushes economy onto lower trajectory of per capita income (with same growth rate as before)

How does population growth affect savings
Fast population growth higher dependency ratio lower per capita savings
Empirical link between population growth and savings rate unestablished in LDCs
4. Impact on renewable resources: tragedy of the commons, incentive for higher fertility. Large and
growing population results in greater risk of 'excessive' use.
Population density needed for property rights (Kenyan Highland)
KEY ISSUE: better to introduce property rights or limit population
How can we explain relationship between high income and low fertility?
Microeconomic theories (Becker 1981)
Children viewed as normal good
Price effect: in higher income societies, opportunity cost of parents' time is higher than in lowincome countries
Substitution effect: Parents substitute against quantity for quality
In modern economies, substitution and price effects outweigh the income effect, so high income
societies depict lower fertility.