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1. Chapter 5
Population Growth (Causes, Consequences,
and Controversies)
Problems and Policies: Domestic

2. The Basic Issue: Population Growth and Quality of Life
• Six major issues:
1)Will developing countries be able
to improve levels of living given
anticipated population growth?
2)How will developing countries deal
with the vast increases in their
labor forces?
3)How will higher population growth
rates affect poverty?
2
4)Will developing countries be able to
extend the coverage and improve the
quality of health care and education in
the face of rapid population growth?
5)Is there a relationship between
poverty and family size?
6)How does affluence in the developed
world affect the ability of developing
countries to provide for their people?

3. Population over time and the demographic transition
• The growth rate of the population:
3
gt = 100* (pt – pt-1)/pt-1
•The global population growth rate increased steadily from 1800s to the 1960s,
peaking at about 2%. Since then it has decreased, to around 1.5% now.
• A possible explanation is that countries are undergoing a demographic transition:
A shift from high birth and high mortality rates to low birth and low mortality rates.
•World population reached its 1st billion around the 1800s. Today it stands at
roughly 7 billion people. About every 4 days, the world pop increases by 1 million.
•In the last 60 years, the largest population increases have been taking place in
developing countries, especially in Asia and Africa.
•Demographers expect the world population to stabilize at around 8 billion.
•What are the key determinants that drive the demographic transition?

4. 4
Population Growth: Past, Present, and Future
Year Estimated
population
Estimated annual increase in
the intervening period
Doubling time
(year)
10,000 B.C.E. 5
1 C.E. 250 0.04 1733
1650 545 0.04 1733
1750 728 0.29 239
1800 906 0.45 154
1850 1171 0.53 130
1900 1608 0.65 106
1950 2576 0.91 76
1970 3698 2.09 33
1980 4448 1.76 39
1990 5292 1.73 40
2000 6090 1.48 47
2010 6892 1.22 57
2050 9200 0.675 103

5. Population Growth: Past, Present, and Future
5

6. World Population Distribution by Region, 2010 and 2050
• Geographic region
• Fertility and Mortality Trends
• Rate of population increase
6
Factors of distribution
• Birth rates, death rates , Total fertility rates
• Age Structure and dependency burdens

7. 7
The determinants of population growth
•Total fertility rate is the average number of children born to a woman of childbearing
age (15-44). Mortality rate is the number of deaths among population (group of pop) per
a period of time
• The birth rate is number of babies born each year per 1000 inhabitants.
• The death rate is number of deaths each year per 1000 inhabitants.
• Both the fertility and death rate can be computed age-specific.
•The population growth rate is the difference between the birth rate and the death rate
(expressed per 1000 habitants, divided by 10 to get percentage growth rate).
•The net migration rate is the difference between the number of persons entering and
leaving a country per 1000 inhabitants.
•The birth, death, and fertility rates depend on the age distribution defined as the
percentage of the population belonging to different age groups.

8. distribution.
8
Age Distribution and Population Growth
•Population pyramids are often used to show the age distribution within a country.
•A stationary population is defined as having zero growth over time (i.e., stable fertility
and mortality rates).
•Even temporary fertility shocks to a stationary population creates inertia, leading to
growth long after the shock (e.g., U.S. baby boom and baby boom echo).
•Therefore, family planning policies tend to have a delayed effect. This must be taken into
account when evaluating their effectiveness.
•There is usually a high proportion of young people in developing countries, while there is
a usually a high proportion of elderly people in developed countries. Even where mortality
and fertility rates are the same the age distribution significantly affects population
growth.
• Table below shows an example of the effect on population growth of differences in age

9. The Effects of Age Distribution.
100 population grows 0%the next period and die.
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• Country A: 70 young & 30 old
• Country B : 50 young & 50 old
• 50% male and 50% female in each
• Today’s young will become old in
• The mortality rate is 10%. Fertility rate is 2.2.
• A’s pop in next period = 2.2*(70/2)+(70*.9) =
140 population grows 40%
• B’s pop in next period = 2.2*(50/2)+(50*.9) =

10. Fertility Rate for Selected Countries, 1970 and 2009
• The Hidden Momentum of Population Growth
– High birth rates cannot be altered overnight
– Age structure of developing country populations
10

11. Pyramids: Developed and developing countries and case of Ethiopia
11

12. The Demographic Transition
• Stage I: High birthrates and death rates
• Stage II: Continued high birthrates, declining death rates
• Stage III: Falling birthrates and death rates, eventually stabilizing
Demographic Transition in Western Europe
12

13. The Demographic Transition in Developing Countries
13

14. The Malthusian and household models
• The Malthusian Population Trap
– The idea that rising population and diminishing returns to fixed factors
result in a low levels of living (population trap)
The Malthusian Population Trap
14

15. 15
• Malthusian Model did not take into account the
following
–Impact of technological progress
– Microeconomics of family size
–So far no evidence of growth in population and fall in
levels of per capita income (in the data)
Criticisms of the Malthusian Model

16. How technological and social progress allows nations to avoid the
population trap
16

17. 17
The Causes of High Fertility in Developing Countries: The
Malthusian and Household Models
• The Microeconomic Household Theory of Fertility
• The Demand for Children in Developing Countries
– First two or three as “consumer goods”
– Additional children as “investment goods”:
– Work on family farm, microenterprise
– Old age security motivation

18. The determinants of fertility choices
Panel (A)
18

19. Panel (B)
19

20. Microeconomic Theory of Fertility: An Illustration
• If there is an upward shift in income, it’s possible to afford both more
children and consumer goods
• Typically, poor families have more children that rich families. Are
children inferior goods?
•The opportunity cost of having children, especially for
women, increases with economic development.
•There is a quantity-quality trade off. At higher levels of
development, parents choose to invest more time and
money per child.
20
As Y ↑, the OC of time also ↑ and parent prefer to invest in child quality rather than in child
quantity. It implies that they spend more time and money on a smaller number of children.

21. •Ashift in preferences is another possible
explanation for fertility choices.
•The change in the relative benefits of having
children translates into a change in the shape of
indifference curves between consumption and
children.
•Preference can change for noneconomic
reasons, especially social norms.
•Areduction in benefits will result in fewer
children and more consumption of goods and
services.
•The benefits of having children are at least
partly related to the differences in institutions
across countries.
21
The change in preference are related to the
development of pension programs,
urbanization that eliminate the need to have
children who will ultimately have to care for
aging parents.
Reduction in the Benefits of Having Children

22. 22
In societies with no social security, children may represent an investment for
retirement and a source of financial security. Therefore, poor parents tend to
have more offspring where:
• Infant and childhood mortality are high.
• Children tend to be less educated, because they may potentially be less
productive.
• Because of extreme poverty children move away from their parents.
• In advanced economies, parents can use the promise of inheritance as an
incentive to make sure their children take good care of them.
• In the absence of economic incentives, however, you often find that poor
countries enforce parental support through cultural and social values.
Fertility Choices and Institutions

23. 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
Demand for Children Equation
Under neoclassical conditions,
we would expect:
 0
Y
Cd
 0
Cd
Pc
 0
23
Px
Cd
 0
Cd
tx

24. 24
•Changes in fertility usually happen gradually as people take time to adapt to the evolving
economic and social trends. In the different stages of the demographic transition the costs
and benefits of having children change.
•Improved income, medical technologies, education, urbanization, pension systems, and
opportunities for women outside the home all have pushed fertility rates down.
• Social norms evolve or disappear.
•Contrary to Malthusian predictions, the global population is likely to stabilize as a result
of declining fertility in developing countries.
• But populations of developing nations are aging.
•The old-age dependency ratio is defined as the ratio of retired people (over 65) over the
active population (16-64).
Fertility Choices and the Demographic Transition

25. • Implications. Fertility lower if
– Raise women’s education, role,
and status
– More female nonagricultural wage
employment
– Rise in family income levels
– Reduction in infant mortality
– Development of old-age and
social security
– Expanded schooling opportunities
The Consequences of High Fertility:
Some Conflicting Perspectives
• Population growth: “It’s Not a Real
Problem”:
– The real problem is not population
growth but the following,
• Underdevelopment
• World resource depletion and
environmental destruction
• Population Distribution
• Subordination of women
• Overpopulation is a Deliberately
Contrived False Issue
• Population Growth is a Desirable
Phenomenon
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Some empirical evidence

26. The Consequences of High Fertility...
• “Population Growth Is a Real
Problem”
–Extremist arguments
–Theoretical arguments
–Empirical arguments
• Lower economic growth
• Poverty
• Adverse impact on education
• Adverse impact on health
• Food issues
• Impact on the environment
• Frictions over international
migration
Goals and Objectives: Toward a Consensus
• Despite the conflicting opinions, there is some
common ground on the following:
 Population is not the primary cause of lower living
levels, but may be one factor
 Population growth is more a consequence than a
cause of underdevelopment
 It’s not numbers but quality of life
 Market failures: potential negative social externalities
 Voluntary decreases in fertility is generally desirable
for most developing countries with still-expanding
populations
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27. 27
–Attend to underlying socioeconomic conditions that impact
development
–Family planning programs should provide education and technological
means to regulate fertility
–Developed countries have responsibilities too
6 Some Policy Approaches

28. • What Developing Countries Can Do
– Persuasion through education
– Family planning programs
– Address incentives and disincentives for
having children through the principal
variables influencing D for children
– Coercion is not a good option
– Raise the socioeconomic status of women
– Increase employment opportunities for
women (increases opportunity cost of
having more children, as in
microeconomic household theory)
• What the Developed Countries Can Do
28
Generally
- Address resources use inequities
- More open migration policies
• How Developed Countries Can Help
• Developing Countries with Their •
Population Programs
-Research into technology of
fertility control
-Financial assistance for family
planning programs

29. 29
To speed up the demographic transition, governments often intervene with policies
directed at lowering fertility.
• The “one child” policy implemented in China in the late 1970s is an extreme example of
population growth control.
• Recently, the gender imbalance has made it difficult for men to find wives.
• Similar extreme policies were enacted in India during the 1960s-1970s. These included,
for example, forced sterilization.
• More recent policies aimed at reducing fertility include improving education and
increased access to contraceptives.
• Does there exist an imperfect market for contraceptives?
Family Planning Policies

30. 30
The economic justifications of family planning are often based on the existence of
externalities. In this case, while it is rational for a family to have many children, this
decision may impose negative impacts on others and society as a whole.
What are negative/positive externalities of having more/less children?
• The strain on natural resources are an example of a negative externality.
• Another example is the congestion (increased demand) in the provision of public
services, especially education.
• Population pressure in low-growing developing countries can induce people to
emigrate to developed nations.
• However, an influx of immigrants may be beneficial for developed nations, especially
in the case of an aging population (i.e., immigrants contribute to the workforce).
Externalities and the Economics of Family Planning

31. 31
Concepts for Review
•Birth rate
• Death rate
• Demographic transition
• Doubling time
• Family-planning programs
• Fertility rate
•Hidden momentum of population
growth
• Life expectancy at birth
• Malthusian population trap
• Microeconomic theory of fertility
• Mortality rate
• Natural increase
• Net international migration
• Population-poverty cycle
• Population pyramid
• Rate of population increase
• Reproductive choice
• Total fertility rate (TFR)
• Under-5 mortality rate
• Youth dependency ratio