Population Economics

Self Selection in Migration. : Observable (age, sex, educ) and unobservable (risk, motivation) characteristics Impact of immigration at destination depends on who migrates Impact of emigration on those left behind

Change in birth intervals leads to ... (1 thing) & their impacts on fertility

Shorter intervals (+ fertility)

1st Economic Dividend: Youth Bulge to Workforce includes ....

Skills/education Jobs, Jobs, Jobs (where from?) Domestic saving and FDI

Indirect deterrminants --> Direct Determinants --> Fertility (example)

Socioeconomic

derivative (population) over time, t, = rate of pop growth, r, is equal to = deriv of pop over total pop.

dP = B - D r = dP / P = b -d

Since 1950 there has been a _______ in fertility, even in Africa

decline

Constructing modern school facilities were conducive to learning; d_________ in p_____ of child quality. they find .... (Aaronson et al )

decreasing ; price they find no evidence that the change in black infant mortality over time is associated with new school buildings. Women facing improved schooling opportunities for their children were more likely to have one child. Women who obtained more schooling in the program delayed childbirth.

Demographers are more likely to use social factors to explain mortality decline in the 18th century., like...

disapearance of the plague/ epidemics, reduction of famine, sociocultural practices

The most common economic explanation for different behaviors are are tastes (D______ rate). Education may be the result of different u______ functions.

discount ; utility

The transition from income stagnation to ______________ growth is accompanied by a _____________ transition from high to low _____________ (e.g. industrial revolution)

economic ; demographic ; fertility

When h_____ and d_________ insurance is publicly provided, i__________ differences is potentially less imporrtant

health ; disability ; income

US and Norway make schooling compulsory and find ...... about teen birth rate (Black et al)

increased school does decrease births

Before the ______________ revolution, the rich had more surviving children than the poor.

industrial

Parental education is an increased o___________ c____ but also increases w_______.

opportunity cost ; wealth

Example of exogenous shocks on population growth is :

- Prices after Justinian Plague - Bubonic plague in Europe - Forced migration (slavery) - Voluntary migration (French Canadians

Why did the plague disapear? (3 reasons)

- Quarantine - No long-term immunity - Natural selection

Other impacts fertility through (1/4)

- Religion: Brazil had a falling fertility rate before the visit of the Pope. The visit correlated with the rise in belief of fertility/ catholicism. 1.6% increase in births.

Education Gradient Income + Insurance + Family Background = _____% Knowledge + Cognition = _______% Social networks = ____%

30% ; 30% ; 10%

The role of individual decisions in revisionist endogenous growth models : World bank (1984) & Demeny (1986): they emphasize population market and institutional failures E.g. population growth increases the risk of social unrests and wars (competition among people due to scarcity of ressources)

An influential study from the National research Council of the National academy of Science (1986) emphasized the ability of the market and institution to adjust. Different views of the pervasiveness and relevance of market failures

Another Solow paper: Kremer, Willis, and You (2021) revisit cross-country convergence patterns over the last six decades. They provide evidence that the lack of convergence that applied early in the sample has now been replaced by modest convergence

Another Solow Paper: Acemoglu and Molina (2021) argue that these results are driven by the lack of country fixed effects controlling for unobserved determinants of GDP per capita across countries.

the calculation of population growth :

Any interval of time a population varies numerically as result of births, em/immigration, or deaths

By reducing informational barriers and transaction costs, migrant networks-diasporas stimulate exchanges between countries: Foreign direct investments Trade Technological adoption Institutional values (democracy) Other behavioral norms

Civil registration - Historically baptisms, births, burials - Purpose : administrative and to understand demographics - Advantages : continuous, precise geographic data, accuracy testing for census - Disadvantages : uncertain coverage, limited context, time can be inconsistent

Recent developments to migration data include .. . - geo-tagging via social media - limitation is that not a random sample.

Class 3 Conclusions (1/2)

Reproductivity and mortality are not independent of one another . Health and fertility are not independent. It is therefore unlikely that opposite extremes should coexist. Increased well-being favoured the spread of voluntary fertility control, as was mortality, but the evidence suggests that the link may be less direct for fertility, even if it was also debated for mortality (remember Deaton on the strength of causality).

Solow and the increase in population : Suppose the growth rate of population increases but everything is kept constant except population growth rate.

Results: Different population growth rates have no effect on economic growth below steady state. But, Different steady states income will be accomplished: Increase in population growth rate will decrease capital per worker (& per capita) Production per worker will also decrease ⇒ pessimistic in terms of living standards. But total output will increase, as n increases, Y increases too, even if output per worker decreases (Y and K grows with N)

Change in Disease leads to (4 things (GRHV)) & their impacts on mortality

Greater transmissibility (+) Reservoir(+) Higher adaptability (-) Variety (+)

Class 3 Conclusions (2/2)

High infant and child mortality rates are linked closely to high fertility rates: - parents have additional children to replace those lost. - 'child-survivor hypothesis', parents base their fertility decisions on a desire for a certain number of surviving children. Risk-averse households raise fertility by even more than expected mortality!

Household Model of Migration - Migration decision are not made by individuals but groups. - Max Household Utility (maximize income) - Migration is seen as insurance mechanism (increases income, minimises variability) - Variability minimisation is crucial when household have repetitive shocks. - Relative income & inequalities, as opposed to absolute income encourage migration

Household Model of Migration Minimize Risks through : - Foreign labor markets = uncorrelated risk with local markets - Remittances are critical as a buffer, esp in LICs with little insurance/ credit - When local conditions are good, remittances can be used more effectively.

Household Model of Migration Minimize Risks through : - Foreign labor markets = uncorrelated risk with local markets - Remittances are critical as a buffer - When local conditions are good, remittances can be used more effectively.

Why is there a difference between fertility and contraceptive use across genders?

Male wages are higher, but they invest less in children education

The demographic transition definition versus malthusian. The economy enters in a modern growth regime with reduced population growth and sustained income growth (Technological progress accelerates, Human capital formation, growth process freed from counterbalancing effects of population growth).

Malthus: income growth ⇒ population increases ⇒ income per capita decreases Demographic transition: income growth ⇒ population decreases ⇒ income per capita increases

Exposure facors for fertility include:

proportion married

The Preston Curve is the relationship between r_______ G_____ per capita and l________ e___________

real GDP ; life expectancy

Social rules, taboos, marriage, and means to control population growth are examples of ......

socially determined adaptation process

Forced migration in the slave trade was a demographic drain and caused the West Afrrcan population to s__________

stagnate

Sub-saharan africa is a p____-d_________ country.

pre-dividend

Least developed countries have a population growth rate _______ times higher than the RoW.

2.5

There have been _____ main population cycles. growth happens _______ , with a___________, s________, and r________ phases.

3 ; irregularly ; acceleration ; stagnation ; regression

How are income and health linked (3 main arguments) ?

- Nutrition - Health Technology - Development (economic activities and inequalities)

Hunting & gathering leads to ... (4 things)

+ population + density - mobility + agriculture

Critiques of Malthusian Trap

- Assumes decreasing marginal returns and constant returns to scale (technology is exogenous) - Focus on the wrong variable: per capita income - The model applies particularly to agricultural economies, the growth of which is limited by the availability of land and to poor population, that spend a high proportion of income acquiring food. - Less compelling when dealing with industrial processes. - If fixed resources are abundant and can be substituted then there is no reason why demographic growth could not generate economic development in the long run.

Why do economists focus on income to predict mortality ?

- Best indicator of living standards - Goods and services expenditures influence mortality - Growth models are mostly based on income and the relationship between mortality/ LE and income growth

Causes of Demographic Growth

- Economic expansion - Increase in standards of living - Malthusian explanation : demography and living conditions shape each other

Consequences of the spread of disease (5 reasons)

- Lower fertility - High mortality - Rebound affect at the end of the crisis, but not enough to compensate - Lower mortality among children after the crisis

Ban on child labor impacts fertility through (1/3)

- There is a high return on children's labor compared to investments in skills from school - ~40 million children in modern slavery ; 152 m in child labor globally

Example of the roman empire in demographic transition

- Trade and technology had limited impact on agrarian economy - population growth could have overwhelmed productivity - Justinian plague of AD 541 was devastating

Voluntary migration among French Canadians caused growth in North America. It was successful because of ...

- Young marriage age and remarriage - High natural fertility - Low mortality (the difficult journey served as natural selection)

Women's education means women are more likely to....

- be receptive to family planning and social norms - change family size - have enhanced power within the family

Parental income impacts fertility through

- investment of time/ money - father's income (+) effect - Mother's income (-) effect

Level of income influences mortality via .... (3 ways)

- level - growth - growth i - growth m

Therefore we should have in the Malthusian models expansion/ recession phases from positive checks subsistence level in the absence of checks

1 Food scarcity causes mortality to increase, slowing (or reversing) population growth: equilibrium. 2 Law of diminishing returns on labor 3 Production and productivity increases resulting from invention and innovation provide only temporary relief, any gain is cancelled out by demographic growth. 4 Awareness of vicious cycle and "positive" or "preventive" checks may constrain population growth through policies.

Optimists proffer a growing population as a net contributor to economic growth for two reasons:

1) A larger population brings increasing marginal returns and economies of scale in production and consumption (all neoclassical models are scale neutral). 2) Population pressure encourage technological innovation, organizational and institutional change.

The number of births depends on biological and social factors which determine 2 parameters:

1) Frequency of births 2) The portion of puberty used for reproduction

3 explanations for the lagged decline in fertility with respect to mortality

1) Realization that it was not necessary to have many children (5 or 6) in order to keep some of them alive (2 or 3) => mortality responds more quickly than fertility to the economic changes 2) The growing participation of women in economic activity outside the home 3) The impact of education and women's emancipation, enlightened by the intellectual elite

5 ways that mass schooling changes fertility (Caldwell) - Proportion of school in population matters more than depth

1) Reduce child labor 2) raises cost 3) childhood = dependency 4) speeds up cultural change ; creates new culture 5) middle class values in less developed places

Landry (1874-1956) found (5) main reasons for the demographic transition:

1) Unprecedented long-term decline of infant and adult mortality 2) Economic growth, progress in agriculture, better transportation and storage, extension of markets (free circulation of grains). 3) Better food, better hygiene, first efficient efforts to vanquish diseases (e.g. vaccination). 4) Compulsory, secular, and free public schooling with a strong emphasis on hygiene and health education. 5) New values: Enlightenment, interest for the quality of education, decline of religious fatalism.

Why did nomads become sedentary (3 main reasons) . Overall, populations became less prone to extinction.

1) greater stability 2) mortality, fertility, and diseases 3) increase in fertility compensated for mortality

Population structure influences ...

1) health & education expenditure 2) epidemics 3) poverty, development, and economic growth

What are economists' reasons for differences in fertility between countries? (7)

1) mortality 2) parents income 3) old-age support 4) ban on child labor 5) women's education 6) labor participation and unemployment 7) Other: policies, persuasion, health....

5 Sources of Data 1 Civil registration : Vital Statistics 2 Population Census 3 Population registers -- files like permits 4 demographic survey 5 Simulations and projections

_____% of differences across countries in total fertility rates are accounted for by women's desired fertility (_______)

90 ; choice

Classical Opinion of the impact population growth on economic growth : (Smith, Marshall, Kuznets/ Hirschman)

A. Smith invoked scale and resultant induced innovation not only to explain economic growth but also as arguments for a positive effect of population growth on economic growth. Marshall note that "while the part which nature plays in production shows a tendency to diminishing returns, the part which man plays shows a tendency to increasing returns". Economies arise out of increased knowledge, greater specialization, better communications, etc, resulting from population growth. Kuznets, Hirschman: same emphasis on the positive role of population.

Mechanisms of Unified Growth Theory : The growth process is characterized by stages of development and it evolves non-linearly.

Acceleration in the rate of technological progress => increases the industrial demand for human capital in the later part of Post-Malthusian Regime (i.e., the second phase of industrialization), inducing significant investment in human capital, and triggering the demographic transition and a rapid pace of economic growth

Biologic Capabilities for fertility include:

Age at puberty, menopause, and sterility Menstrual cycles Intrauterine mortality (miscarriages)

Are educated migrants likely to come back? Old pessimistic view: negative selection Are returns beneficial? Foreign experience premium (India, Taiwan, Eastern Europe, etc.); Entrepreneurship in Tunisia and Egypt; Foreign students and democracy, etc.

Lucas Endogenous Growth Model

Assumes that individuals acquire productivity enhancing skills by investing time in learning; accumulation of skills by one individual not only enhances his productivity, it also enhances the productivity of all workers through its positive spill-over effect on the average skill level of the whole labour force. Lucas assumes that aggregate production technology can be represented as F(K, HL), where K is the stock of physical capital, L is employment (proportional to population), and H is the accumulated stock of "human" capital or of knowledge per capita.

Health may be important to fertility and education endogenously. Jayachandran and Lleras-Muney (2009): Improvements in life expectancy increase investment in human capital which may spur economic activity - Mincer model : Maximize expected utility in 2 gens - Maternal mortality decrease has advantages of large gain in life expectancy

Assuming no correlation. They find girls gain more schooling, affect on childbearing decision, no affect on boys educ when maternal mortality falls. Skills premiums and a rise in market wages mean higher opp costs. The third Caldwell mechanism accelerates this.

Barriers to migration include .... - legal - economic costs, labor - distance - social - linguistics - institutional barriers - racial intolerance

Barro (1997): Population growth not significant to explain GDP per capita (in contradiction with Solow), but negative correlation between fertility and GDP per capita (in support of transition theory). Tests with other conditioning variables show income level not to be robust explanation for the declining birth rate (fertility).

Barro (1997) further finds that (female) education is important for bringing down fertility. Problems with multicolinearity, though, as income and education levels tend to go hand in hand.

Becker - Lewis v Synthesis Differences : Becker Lewis : - Emphasis on exogenous prices & income changes =. public interventions will alter fertility Synthesis : - Mortality / breastfeeding decline triggers a demand for birth control - Price of using birth control compare to actual use Developed countries different from developing. - institutional support

Becker Lewis v Synthesis Limitations : - Galor : not good for explaining historical change. Assumes difference in income per capita explain demographic transition (not true - west developed simultaneously despite income differences). Technological change more likely. - Income is more elastic for quality than quantity - Models more effective at the margin. - Needs to expand to include institutions; historical precedence. - Assume maximization - One period, static models - Married couples always agree

Becker Lewis v Synthesis Model Similarities : - Fertility behaviors in poor economies is rational -High fertility is not due to ignorance, it is due to high relative cost of regulating fertility as opposed to time costs. Also, little difference between women's and children's wages in some cases. - All household choices are interdependent (education, health) - Microeconomics more agrees with these models and can exaplain developed v developing.

Becker- Lewis Framework Assumptions: 1 Production occurs both in home and factories 2 Time constraints We are treating non-market activities as optimizing economic choices. (revolutionary micro) Max Utility subject to budget constraint

Becker- Lewis framework We overcome Malthus via 1 Price Effect : Opportunity cost of children, relative to other goods, may outweigh increases in income. 2 Substitution Effect : Quality - Quantity trade-off Substitution Effect happens via 1 Demand for quality 2 Decline in the shadow price of child quality

Becker-Lewis Framework A newly married couple is considered to act as a unitary household with a single decision maker. the family has full-income budget constraint = non-labor income + value of time Time and resources devoted to children are an opportunity cost. Demands for child number and child quality are functions of income. Children are normal goods (income effect) = Malthusian Fertility

Becker-Lewis Framework Change in the Price of Children leads to a Substitution Effect : Substitute away from expenses associated with children Change in Parental income leads to an Income Effect : Demand is higher

Becker-Lewis Framework Change in the Price of Children leads to a Substitution Effect : Substitute away from expenses associated with children Change in Parental income leads to an Income Effect : Demand is higher if income is higher

Becker-Lewis Framework Summary Incerase in opportunity costs, decline in price of child quality; increase in price of child quantity; a decline in fertility is not surprising according to Becker & Lewis.

Becker-Lewis Framework / Household Demand Model Parents care both about welfare and number of children, from which they derive positive utility. Parents face a trade-off. This framework applied consumer theory to understand how Malthusian fertility problem and Unified Growth Theory came to be.

Becker-Lewis Framework / Household Demand Model A unified theory of time, fertility, savings, investment, bequests. Parents care both about welfare and number of children, from which they derive positive utility. Parents face a trade-off. This framework applied consumer theory to understand how Malthusian fertility problem and Unified Growth Theory came to be.

Samuelson, 1958 : Overlapping Generations Model Motivation/ Background

Before: population growth and labor force growth were treated as equivalent. Samuelson introduces a crude approximation of age structure. He claims that age structure is important to understand the effects of demography on economic growth. 2 age groups: a younger working population and an older retired population

Solow predicts Sigma-Convergence: reduction in the dispersion of levels of income across economies. During the last 150 years, economies have instead diverged (instead of the sigma convergence prediction from Solow) despite potential beta convergence. The Solow model could be saved partly if the divergence across countries is explained by shocks and therefore convergence could be found back conditional on these shocks: Technological shocks, Wars, Epidemics, decreasing population

Beta-convergence: occurs when poor economies grow faster than rich ones. Beta convergence is necessary but not sufficient for sigma convergence (demonstration given in appendix).

Better to use MIGRATION FLOWS, not stocks. Stock may capture: - return migration - deaths - naturalizations - births

Factors affecting demographic phenomena ( 6 reasons) :

Birth , Costs, Disease, Nutrition, Predation, Hunting & Gathering

Education impacts fertility through (2/4)

Bleakley, Lange : Eradication of hookworm - eradication meant children could acquire human capital. - can not isolate incentive vs health effect - fertility decliines, school enrollment grows

Bloom & Williamson : The Demographic Dividend There are 2 transitional effects on economic growth: When the working force is growing relative to the population = the dependency ratio declines. Economic growth per capita will increase ⇒ 1st Dividend. When labor force is increasing = return to capital is increasing. Savings, investments are from capital income, so they increase. ⇒ 2nd Dividend.

The share of immigrants in high-income countries has been multiplied by 3 since 1960 An increasing proportion of immigrants is originating from developing countries and these immigrants are increasingly educated South-North brain drain: major dimension of globalization This is a source of concern because...

Brain drain impacts human capital accumulation The association between human capital and economic performance is strong (controversy on causation!) What are the causes, and consequences for origin countries?

Epidemiologic transition

Changing patterns of population distribution

What can you do to manage/ speed-up the demographic transition?

Child Mortality/Morbidity Female Education Social Norms Family Planning

Constraint forces include:

Climate, disease, land, energy, food, space, and settlement

These forces have slow rates of change (a the scale of humanity) :

Climate, disease, land, energy, food, space, and settlement

Less educated people are more responsive to price than those better educated.

Conditional patterns are prevalent ; education might make more of a difference when there is info about dangers associated, but less when there are bans.

Malthusian Trap

Countries would be trapped in low per-capita incomes (per capita food), and pop would stabalize at a subsistence level, except if positive or preventive checks or exogenous technologcal changes

Country of birth versus citizenship - Country of birth is superior option, does not change over time, (except dissolution of countries) - Example: children of immigrants, even if born in the country, can still be counted as immigrants.

Change in Nutrition leads to (3 things (DIG) ) & their impacts on mortality

Decline in quality (+) Increased Instability (+) Greater Reserves (-)

Demographic Growth is : 1) Negative b/c it strains the relationship between fixed and limited resources leading to poverty (pessimists) OR

Demographic Growth is : 2) Positive b/c t stimulates ingenuity and a larger population leads to more production (optimists)

Demographic Surveys - Snapshot which varies widely in content (fertility, migration) - Retrospective or prospective (multiple rounds) - Advantages: Fast, relatively inexpensive, flexible, can include more detail, little continuity - Disadvantages : Single rounds can have coverage and content errors. Multiple rounds have slow needs fo effort over time and high cost

Demographic momentum : Continued population increase DESPITE reduced reproductive rates. - Even if fertility declines, there are still more women having babies due to the birth rate from the previous generation.

Do remittances increase with education? Yes : educated have higher income; likely to be legal migrants and pay loans No : Educated migrate with their family, permanently, usually rich families

The crisis has presented a challenge for the cross-sectoral mobility of workers, which could be particularly hard for lower-skilled migrant workers, especially informal and undocumented workers. The crisis has greatly increased the demand for health care services, and a global competition has already begun with many developed countries announcing incentives to recruit doctors and nurses from abroad.

During the global financial crisis in 2009, many migrant workers moved from construction to agriculture and retail. There is a global need to train more health professionals and provide recognition of skills in host countries in the long term.

What is a cause?

Economic variable that explains

The education gradient defintion:

Education is strongly associated with better health and longer lives (with variation across cohorts/ countries) More eduction = - less smoking - lower weight / more physical activity - less drinking - more physical exams - more smoke detectors in home - more seatbelts

The role of individual decisions in revisionist endogenous growth models : the aggregate outcome of many individual decisions at the micro or family level, and thus one aspect of a larger complex system (with imperfections). Signals provided by the larger system and maximisation of households' and social welfare

Emphasis on Micro-level decisions that leads to 2 ideas related to the consequences of demographic growth on development: - Rapid population growth is not a primary impediment to economic development but can exacerbates the effects of failings in economic and social policy - Second, the negative effects of rapid population growth are likely to be mitigated in the long run by family and societal adjustments

Theoretical Critiques of Malthusian Trap : Technological progress is exogenous Savings/investments are also exogenous No human capital incorporated.

Empirical Critiques of Malthusian Trap : Weak empirical evidence of a convergence (as we said from Barro or Levine and Renelt). Simulated results are implausible

Dynamics definition :

Evolution over time and within countries/ regions/ individuals

Boserup (1965, 1981) : Human capacity to increase food supply - Demographic growth and scarcity of food resources = motor of innovations = good for economic growth

Example: The green revolution (economies of scale due to new technologies in the 1960s) allows an increasing population size (Nerlove andd Raut, 1994).

Parental education and population - __________ education matters more for fertility and c_____ h______ - this is used as justification for ...... - Education ______ the opportunity cost of women's time.

Female ; child health educational expenditure towards girls raises

2nd Economic Dividend: Savings of the Cohort includes ...

Financial institutions/mechanisms Savings policy (e.g. Pensions)

Malthusian Trap example:

For example in the 14th century the Black death brought a largely exogenous increase in mortality, as total population fell, wages rose. By the mid-16th mortality was lower, population size was recovering; relative price of food and land rents were rising and wages were falling.

Education impacts fertility through (3/4)

Fortson: HIV - negative relationship btw HIV and Change ini educational attainment. - high HIV, big decline in school via increased mortality risks

Countries with higher ________ have _________ birth rate

GDP ; lower

Effects of education on health differ by (5) ....

Gender ; labor market returns ; quality ; whether education affects the quality of peers ; culture

Barro (1992) : Introduces different shocks in the Solow regression (violence in the country, revolutions, etc).

If they ignore these shocks , they don't have any convergence, if they include them they find back convergence. ⇒ conditional convergence (conditional on other variables being held constant).

Partially automatic definition :

Immunity developed after infection, nutritional adaptation to food resources

Bloom & Williamson : The Demographic Dividend - Transition theory and labor supply model to explain demographic transitions Phase 0: No economic growth. High births and death rates. No population growth. No change in share of population at working age . Phase 1: Economic growth is initiated. Death rates start to decline rapidly (infants/ children). Birth rates not yet affected. Phase 2: Continued economic growth. Birth rate slowly drops. Death rate stabalizes. Deathr ate among working age continues decline. Phase 3: Continued economic growth. Birth rate rapidly falls. Death rate among elderly starts to fall. Phase 4: Continued economic growth. Birth rate continues to fall, but now at slower rate. Child death rate stabalized. Death rate among elderly continues to fall. Phase 5: Continued economic growth. Stabilized child birth, death rates. Pop growth stabilized. Working age pop declines, stabilizes. Phase 6 (extension): Child birth rate continues to fall below replacement level . Death among elderly falls. Birth rate is lower than the death rate.

Implications: 0 Population growth starts to increase from a low initial level 1 The share of young children in the population increases 2 Pop growth continues. Working age pop increases (lagged) 3 Population growth rate declines. Diminishing return on working age pop. 4 Steady state growth rate.Working age pop begins to decline. 5 Steady state for pop growth and working age. 6 Population decline.

But as a predictor of the future, Malthus turned out to be wrong, both about diminishing returns and about human reproductive behavior ("fixity of passion").

Improvement in technology ⇒ gains in productivity that outstripped any effect of diminishing returns and per capita income gain. Beginning of the 20th: Steady but slow population growth with low fertility consciously controlled, sustained productivity increases and improving consumption standards for the majority.

Ban on child labor impacts fertility through (2/3)

In (Hazan and Berdugo) parents are constrained by budget, control child's time. Income generated by child accrues to parents. Parents care about descendants. - Increase in wage diff btw parent & child --> lower fertility - In early development: high fertility, high child labor, Y/N is low -Tech progress increases the wage diff w/o educ. So, less incentive to have child labor/ fertility declines.

Solow Papers: Leibenstein (A theory of economic-demographic development; 1954) and Nelson (1956): Poorest people have dfficulties to save

In these models, two equilibria: a low-level equilibrium trap for developing countries. Only massive capital formation or a major stimulus can overcome the trap to reach a higher equilibrium (the developed country high equilibrium). Small increases in income in populations at the subsistence level may lead to increases in labor supply that swamp small increases in capital or to other small « displacements » or stimuli to the economy (traps)

Solow (1956): Exogenous growth model The output of an economy grows in response to the relative availability of production factors (labor and capital). Savings are assumed to be a fixed fraction (determined by the population propensity to save) of output and technology improves at an exogenous rate. Variables such as human capital or human health variables do not enter in this model. Furthermore, the constant-returns-to-scale production function conforms to diminishing marginal returns in its two arguments (capital and labor).

In this framework and holding saving and capital depreciation rates fixed, the dynamics of the population will determine the dynamics of national income, possibly adjusted by exogenous technology growth rate. The result: Population growth leads to capital dilution i.e. fixed capital supply has to be divided by more people: income per capita decreases (as a result of increase in labor supply compared with capital formation).

Economists are more likely to use social factors to explain mortality decline in the 18h c., like...

Income levels in the country, development

Example of Demographic Transition: Frrance France (1876-96)

Income per capita seems to have a positive effect on fertility rates during France's demographic transition, accounting for education, the gender literacy gap, and mortality rates (Murphy 2015). Mortality rate had no effect on fertility during Frances demographic transition, accounting for education, income, and the gender literacy gap. (Murphy 2015). Education in general, female education in particular, for example, seems to be crucial (Murphy, 2015)

The Nutrition trap (Fogel) :

Increased agrriculture production ; decrerase in childhood malnutrition ; higher production and lower prevalence of disease ; increase in productivity

Ban on child labor impacts fertility through (3/3)

Indian ban policy (Bharadwaj) resulted in more child labor b/c of decr. in child wages. Ban was imperfect = higher cost to hire children. Thus, the ban meant lower wages for children to compensate for fines paid by companies.

Instrumental Variables in 2SLS - IV predicts treatment, imperfectly. - IV not directly related to outcome through measured or unmeasured paths. then you run 2 OLS regressions 1 Purge endogenous variable of it correlation 2 Correct for correlation between error term and independent variable

International Migrant by the UN : Change of country of usual residence 'usual' -- excludes short-term migration as business travels or tourism

International migration once = likely to do so agai International migrant FAMILY member = more likely to migrate International migration has more barriers, networks are more important. Cumulative migration is more likely when migrant comes from community/ family encouragement.

How did the demographic transiton spread?

It began in NW Europe and United States (France, England, the Netherlands, Scandinavian countries) Then gained ground in Central Europe (Germany, Austria, Northern Italy, Northern Spain) Finally Mediterranean Europe (Spain, Portugal, Italy, Greece) As a result, in 200 years (1750-1950) the population of Europe (with Russia) rose from 146 to 573 million, i.e. was multiplied by 4.

Why do we look at mortality rates by age group and not life expectancy a birth?

LE @ birth is a summary measure that collapses all rates by a given year. There is an assumption that age-specific mortality rates are constant. This masks specific differences in age-specific trends.

COVID-19 crisis? For the first time in recent history, the stock of international migrants was likely to decline in 2020, as new migration slowed and return migration increased. Initially, the lockdowns and travel bans left many migrant workers stranded in their host countries, unable to travel back. Later in the year, however, return migration was reported across all parts of the world. Finally, the crisis has exposed significant data gaps that have prevented real-time monitoring of remittance flows and migratory movements, including of stranded migrants and returning migrant There is a pressing need to improve relevant data collection systems.

Later in the year, however, return migration was reported across all parts of the world. Finally, the crisis has exposed significant data gaps that have prevented real-time monitoring of remittance flows and migratory movements, including of stranded migrants and returning migrant There is a pressing need to improve relevant data collection systems.

Costs of child rearing leads to .... (1 thing) & their impacts on fertility

Less costs (+ fertility)

Old age impacts fertility through (2/2)

Macro literature is inconclusive Micro literature supports this: - More pension, less co-residents; more pensions, less inheritence

Models of unified growth theory are built on several blocks: (1/2)

Malthusian elements: Consumption constraint. In expansion phases, income increase generates an increase in fertility. Forces behind technological progress: In early stages, the force is population size, whereas it is human capital investment in more advanced stages.

Migration Wavevs First optimistic wave (late 1960s): neutral impact on origin countries Second pessimistic wave (1970-1995): brain drain affects fiscal policy, wage bargaining etc. Third mixed wave (1995-): brain drain induces positive and negative effects; new databases, new theories, emerging empirical literature; the global effect is ambiguous and country-specific

Migration data collection is varied because it is a global trend - Need to improve quality of data (2030 sustainability goals) - Data now is often missing, lagging, unreliable, incomplete, or lacking in cross-country comparability - Irregular migration is huge challenge - Often no distinction between regular and irregular migration or types of temporary migration - Country of birth v nationality of migrants.

Migration is driven by percieved differences in the utility of living or working in two geographic locations. Migration can therefore be stimulated by ... - economic reasons (wages) - decreased cost of migration (tickets, community) - social - institutional - political (escape conflict, environmental) - micro and macro conditions

Migration networks lower the cost of migration by providing information that reduces uncertainty. - finding a job - legal channels - family reunification Distribution of income -- motivation to migrate Distribution of land -- spending target Culture of migration -- 'right of passage' Social labelling 'migrant jobs' First migrants likely to be middle/ upper class

Population growth is ________ due to fertility increase, because fertility decreases _______ than mortality

NOT ; LATER

Conclusions:

On growth models and absolute convergence, note that the situation can evolve.

Models of unified growth theory are built on several blocks: (1/2)

Origin of human capital formation: Technological progress is skill biased in the long run. Technological progress reduces the adaptability of existing human capital to the new technology, and educated individuals have a comparative advantage in adapting to the new technological environment (Human capital permits individuals to better cope with a changing technological environment). Determination of parental decisions on the number and quality of the off-spring: The increase in demand for human capital induces parents to substitute quantity for quality of children.

The adaption process is p________ a________ and s_________ d_________, and results of e_______ c________.

Partially automatic ; socially determined ; explicit choices

Diminishing Returns in Population:

Per capita decline of production, (given population increase and fixed supply of land or capital) Worker productivity is not constant and technology caused it to increase: this may generate more capital (investments) and relax the preceding constraint. The positive effect of this increase may be only temporary, since continued demographic growth will neutralize the gains achieved (in addition no degree of progress can indefinitely increases the productivity of a fixed resource like land).

There is an endogenous relationship between __________ and _________ _________.

Population ; Economic Outcomes

Population Census: Demographic, economic, and social data to all people in a country at a specific time - Egypte 3k BC - Advantages: Universal, national, provides population denominators and context Disadvantages: size limits content and quality, cost limits, delay to reporting, politicized

Population Registers : - Not a snapshot (like census) but updated on residences - household data - enables authorities - residential including migrants - managed municipally

Population Registers better than Census because Population registers are a continuous update of the administrative place of residence. Different from vital records, not only individual data.

Malthusian Trap Definition:

Population increases geometrically (doubling/ exponential) while resources increase arithmetically (linear)

Demography definition

Population size and population structure shaped by fertility, mortality, and migration

Epidemiologic Transtion Stages

Pre-Transition (Age of pestilence and famine) Mid-Trans (Receding pandemics) Late-Trans (Degenerative disease) Post-Trans (Delayed degenerative disease)

Projections Population projection -- Forecast using estimates Note: extrapolation -- projection interpolation - estimation

Census Use Pros: - Large sample size for measurement error - Mostly reliable - universal, national effort Cons: - Longitudinal, sometimes too long - Quality control efforts

Pros: - Large sample size for mesaurement error - Reliable, mostly - Universal - National effort normally Cons: - Longitudinal, but sometime too long - Quality control efforts

Education matters for demographic behavior because of changes in population size and .....

Public health, economic growth, quality institutions, adapatation to climate change...

Education impacts fertility through (1/4)

Quantity-Quality tradeoff: Net transfers from parent to child = child's shadow price. Amount transferred depends on # children and returns. Quantity: # children impacts workforce, returns, old-age support Quality: laborforce quality, social advantages

_____ -______ migration is larger than ______-_______ migration

South-South migration is larger than South-North migration. More than 247 million people live outside their countries of birth. However, the share of migrants has remained just above 3 percent (of world population) for the last fifteen years.

Demographic transition stages

Stage 1: high fertility and mortality rates Stage 2: death rates start to decline Stage 3: fertility rates start to decline Stage 4: low fertility and mortality rates Stage 5: fertility decline under replacement level? Stage 6: rebound of fertility?

Income and Health linked via empirical evidence (1/5) : Nutrition (McKeown)

Studied respiratory tuberculosis and found innovation in treatment accounted for very little cures; living standards mattered

Demand for children : More educated women want less children

Supply of Children : More educated women have higher fertility (more access)

Income and Health linked via empirical evidence (2/5) : Health Technologies (Preston)

The Prreston curve is used to justify development/ growth to solve health problems, but income growth is only 10-25% of increase in life expectancy. Health technology shocks are vaccines, insect control, etc

The Synthesis Model 'Natural Fertility' = Nutrition, culture, and health status of the parents may vary, impacting the supply function of children. Norms like these change slowly over time, so they are exogenous. Couples lack perfect information about how their behavior impacts fertility.

The Synthesis Model - Main difference in contraception and including tastes and externalities Easterlin : Tastes depend also on social surroundings and peers. - Other differences to the Household/ B-L Model is empirical models.

The Synthesis Model - Main difference in contraception and including tastes and externalities Easterlin : Tastes depend also on social surroundings and peers.

The Synthesis Model Optimal Fertility : Total maximization Desired Fertility : If contraception were costless ` Optimal fertility > desired fertility, exogenous declines in the cost of fertility will lead to lower fertility.

The Synthesis Model the Birth Control function means that we have a small economic reality: rebound effect before decline. Only when the supply of births exceeds demand will deliberate fertility control be considered. When benefits of control exceed costs of contraception, deliberate fertility occurs.

The Synthesis Model (Easterlin) Combines demand oriented analysis and demographers' model of the supply of children. Household utility maximizing problem with a budget constraint including fertility regulation (contraception) Exogenous prices, wages, non-labor income, *birth and death From the supply of children: 1 Birth production function 2 Contraceptive use given costs of children

Unified Growth Theory The increased representation of individuals with higher valuation for quality, gradually increased the average level of investment in human capital, permitting a slow growth of output per capita.

The acceleration in the rate of technological progress that was reinforced by the investment in human capital of individuals with high valuation for offspring quality, increased the demand for human capital in the later part of the Post-Malthusian Regime, generating a universal investment in human capital, a demographic transition and a rapid pace of economic growth

Population economics definition :

The analysis of demographic dynamics and its interactions with economic outcomes including : - Direct / indirect impact on economic behavior - Theory - Policy implications

The demographic dividend - Rise in economic growth due to rise in working age population - Occurs during falling birth rate. Late in demographic transition. - example: TIGERS SEA - eventually, population ageing -- japan

Unified Growth Theory : Natural Selection Explanation

The first evolutionary growth theory that captures the interplay between human evolution and the process of economic development in various phases of development, was developed by Galor and Moav (2002).

Income and Health linked via empirical evidence (3/5) : Development

The issue of income and health is complex. Health technology only comes about when disease is in decline and nutrition has a selection effect.

Main messages from lecture 2

The links between inequalities and mortality not systematic. Comparing US and France but also within countries: Social policies can break this link in the USA as well as in France. The French health insurance system is one of the most redistributive in the world, with particularly low out-of-pocket expenditure. The lack of any mortality inequality at younger ages in France can be seen as the result of this universal availability of high-quality health care. The remaining inequalities at older ages point to the continued importance of social determinants of health that cannot be entirely compensated by health care provision, such as education, access to employment, and income support. Technologies matter: exogenous surfactants were introduced in France in the early 1990s and had an immediate impact, as reflected in the large decline in infant mortality observed between 1990 and 1999 for both males and females.

1750 to Contemporary Era :

The population doubled during the industrial revolution in 118 years ; The population doubled again since 1950

Old age impacts fertility through (1/2)

The support rate indicator : Ratio of under 64 to above 65. Gvt increase in pensions reduces fertility. Same w retirement savings.

Unified Growth Theory : The first unified growth theory in which the endogenous evolution of population, technology, and income per capita is consistent with the process of development in the last thousands of years was advanced by Galor and Weil (2000).

The theory captures the three regimes that have characterized the process of development as well as the fundamental driving forces that generated the transition from an epoch of Malthusian stagnation to a state of sustained economic growth.

Samuelson, 1958 : Overlapping Generations Model Results

The younger generation transfers consumption loans to the older generation, the loans to be repaid by the subsequent generation of younger workers. A sustained increase in population growth raises the proportion of the younger group, causing higher consumption transfers for the old. The result: a sustained higher population growth rate leads to higher lifetime economic welfare (optimistic view). BUT Samuelson ignored that children are dependent, in assuming they pose no costs to parents. In fact the increase in labor supply is not direct and the proportion of children in the population will increase first (with related costs: reduced consumption and savings for workers or retires).

Critiques of Endogenous Growth Model: These models explain why steady-state growth rates do not converge (mostly because of the assumption of increasing returns). However .....

They are of little use in accounting for and understanding the demographic transition. Growth in general knowledge and endogenous technical change are undoubtedly important to the understanding of the process of economic growth. But families' decisions with respect to the numbers of children they have and those that affect their survival are crucial to understanding how economic growth and demographic change are related. ⇒ More micro-based models are needed!

Revisionist Endogenous Growth: an attempt to conciliate the demographic theories of transition and the economic theories. What do they do?

They revise the demographic theories in this sense. But they also revise economic theories in the way they include market changes (and particularly labor market) in the explanation.

In the Solow Model: Capital-labor ratio and productivity of labor decreases with population growth (due to constant return to scale and constant rate of saving). More reasources must be used to maintain capital per head, preventing immediate higher consumption and preventing increases in capital per head that would bring higher consumption in future periods. Thus rapid population growth is harmful.

Thus at steady state growth, the steady state of consumption is higher the lower the constant rate of population growth. The model implies that countries with similar production technologies, comparable savings and population growth rates and the same physical capital depreciation rate, will converge to similar levels of per capita income because of diminishing marginal returns.

The top 10 host countries for refugees and internally displaced persons are ....

Turkey (3.6 million), Colombia (1.8 million), Pakistan (1.4 million), Uganda (1.4 million), Germany (1.1 million), Sudan (1.1 million), Iran (1 million), Bangladesh (0.9 million), Ethiopia (0.7 million), and Jordan (0.7 million).

Solow Model Steady State : Growth of per-capita income at steady state can only follow from exogenous technological progress, all other things being equal, relaxing the constraint on decreasing marginal returns.

Two countries with the same production function, same population, same depreciation of capital should converge to similar levels of per capita income because of diminishing marginal returns. In steady state, there is no growth in the long run.

Unemployment impacts fertility through :

Unemployment rises, fertility falls - But if women are postponing childbirth, there is no long-term impact - 1% point increase in unemp. reduces short-run fertility 6/1,000 for (20-24 y.o) and 14.2/1,000 for (20-40).

Income and Health linked via empirical evidence (4/5) : Unemployment

Used as a proxy for macroeconomic activity - Recession increases mortality through reduction in access to healthcare for example, or deceases through less risky activities

Income and Health linked via empirical evidence (5/5) : Inequalities

We can comparer inequalities between places (diff-ini-diff) but not within. Inequalities are more than income, but race, gender, etc

The process of ________ to constriants requires a degree of behavioral flexibility.

adaptation

Martial regime for fertility include:

age at marriage frequency of celibacy frequency of age at death, widowhood, divorce, remarriage, separation

Romer Endogenous Growth Model

assumes that the creation of new "knowledge" by one firm has positive external effect on the production possibilities of other firms so that the production of the consumption good as a function of stock of knowledge exhibits increasing returns.

the relationship between income and life expectancy is probably. ..

bidirectional

Proximate determinants of fertility include b__________ capability, m________ regime, s___________________ factors, fertility r____________ variables, e_______ factors, d_______ m_______ fertility, and n________ m_________ fertility

biologic ; marital ; sociocultural ; regulation; exposure factors; deliberate marital fertility; and natural marital fertility

Populations are thought to be c_____

closed

Children's education becoming c________ means a rise in c_____, but it also provides new opportunities.

compulsory ; cost

Increase in c___________ e__________ in Norway leads to the p________ of f________ b______ in teenage girls (Monstad)

compulsory education ; postponement ; first births

Demographic development is subject to two forces:

constraint and choice

Deliberate marital fertility for fertility include:

contraception ; induced abortion

Mechanisms of Unified Growth Theory : The differential timing of the take-off from stagnation to growth across economies generated ...

convergence clubs characterized by a group of poor countries in the vicinity of the Malthusian equilibrium, a group of rich countries in the vicinity of the sustained growth equilibrium, and a third group in the transition from one club to another.

What is a consequence?

economic variables that are the result of variations like the tax system, public expenditure, economic growth, etc.

The bubonic plague caused population stagnation in the 14th century. The plague is an exogenous event because it is .....

external to the sociodemographic system in Europe and was probably accelerated by living conditions

The economic development stage of a country explains differences in _________ levels.

fertility

When available resources become more abundant, f____________ increases. This is true for plants, animals, and humans before the industrial revolution.

fertility

sociocultural factors for fertility include:

frequency of intercourse duration of breastfeeding sexual taboos and restrictions

Most of people movements do not occur across borders but within. The World Bank reported 762.6 million internal migrants in 2019. Do not confuse internal migrants and Internally Displaced Persons (IDPs) which are ....

internal migrants also but with a specific motivation. Urbanisation in developing countries is sometimes used as a proxy for internal migration since most of the displacements occur from rural to urban areas.

natural marital fertility factors for fertility include:

lactation, frequency of intercourse, sterility, spontaneous abortion, duration of fertility

fertility regulation for fertility include:

length of union abstinence; contraception abortion voluntary sterilization

Unemployment and Crisis (Cutler) Graduating in bad times = l______ wages and _________ health higher unemployment = _______ income, ______ life satisfaction, _______ obesity, _____ smoking and drinking L_________ from a poor labor market are s_______ ________ for the more educated

lower ; poor lower ; lower ; higher ; more losses ; substantially lower

The relationship between TFR (total fertility rate) and life expectancy ---

lower TFR, higher expectancy

Demography is a science which aims to ...

measure population growth, analyze mechanisms and understand causes in a systemic way

Pandemics are coincident with profound m________ change because of change in prices of main factors of p_________ (l____ & l________).

monetary ; production ; land ; labour

Malthusian Policies:

more suitable balance with resources ⇒ a new negative cycle starts except if the population finds a way to limit its reproductive capacity

Economic and demographic changes are m________ d_________ and the relationship is e_________ (circularity).

mutually dependent ; endogenous

Population change from the neolithic period to 1750 is mostly characterized by demographic growth, such as n_____ c____ and limited e_________ shocks.

new cities ; exogenous

Demographic Disaster Definition:

no increase in per capita income possible ⇒ demographic growth exploits natural resources ⇒ poverty and misery (Ricardo, 1815).

Hunters and gatherers became farmers and switched from a n______ to s_____ lifestyle. Population doubling time went from ____ thousand years to ____ thousand years.

nomadic ; sedentary ; 8 ; 2

Change in Predation leads to .... (1 thing) & its impacts on mortality

reduced predation (-)

Mechanisms of Unified Growth Theory : During the initial phases of the Malthusian epoch, the growth rate of output per capita is nearly zero and the growth rate of population and literacy rates is minuscule, .....

reflecting the sluggish pace of technological progress, the low representation of individuals with high valuation for child quality, and the slow pace of the evolutionary process.

Population dynamics are ______ compared to ________ cycles.

slow ; political

The top 10 migrant destination countries are : The top 10 migrant source countries are : ..... is the largest migration corridor in the world. ....... was the second largest, followed by Bangladesh-India, and Ukraine-Russia. The latter are South-South corridors.

the United States, Saudi Arabia, Germany, Russia, United Arab Emirates (UAE), United Kingdom, France, Canada, Spain and Australia. India, Mexico, Russia, China, Bangladesh, Pakistan, the Philippines, Afghanistan, Ukraine, and United Kingdom. Mexico-United States ; Russia-Ukraine

education and income are positively correlated. T______ and m______ are impediments to seeking medical care

time ; money

Results of Explicit Choices definition:

voluntary limitation of birth, migration

Educated _______ provide better care at home ; increases the probability of _______; increases the v_____ of their children

women ; survival ; value

Mechanisms of Unified Growth Theory : In the pre-demographic transition era, traits for higher valuation for offspring quality generated an evolutionary advantage. ⇒ Namely, individuals with higher valuation for the quantity of children had a larger number of surviving offspring and their representation in the population increased over time.

⇒ In contrast, in the post-demographic transition era, when income per capita has no longer been the binding constraint on fertility decisions, individuals with higher valuation for offspring quality have an evolutionary advantage, bearing a larger number of surviving offspring. ⇒ Thus, in the pre-demographic transition era, the number of surviving offspring was affected positively by parental education and parental income whereas in the post-demographic transition era this pattern is reversed and more educated, higher income individuals have a smaller number of surviving offspring.

Mechanisms of Unified Growth Theory : The reinforcing interaction between population and technology during the Malthusian epoch increased the size of the population sufficiently so as to support a faster pace of technological progress, generating the transition to the Post-Malthusian Regime.

⇒ The growth rates of output per capita increased significantly, but the positive Malthusian effect of income per capita on population growth is still maintained, generating a sizable increase in population growth, and offsetting some of the potential gains in income per capita. ⇒ But the acceleration of technological progress due to population growth starts to compensate for the negative effects of population growth (dilution of resources per capita) which enables income increase.

Mechanisms of Unified Growth Theory : In early stages of development, population is relatively small, together with a low level of technology progress ....

⇒ no incentives to invest in education. ⇒ In the later phases of the Malthusian epoch, the increasing rate of technological progress, along with the inherent delay in the adjustment of population to the rise in income per capita, generated positive but very small growth rates of output per capita and population.

Population Economics

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