NU ECO DEV - Chapter 8 - Population

# 08 Chapter 8: Population
FLEX Course Material
Students will able to judge whether rapid population growth directly or indirectly influence economic growth
and development.
Population
Students can rationalize the theory of Malthus on economic growth.
Understand the concept of dependency rate and explain its impact on the economy as a whole.
Module Goals
# 08
At the end of this module, the students are expected to have:
Explained through essay format one of the two questions given below:
Explain how rapid population growth can contribute to rapid economic growth even when the Solow

and the other growth models all show that population growth reduces the level of income in the steady
stage,
Why do you think that effective methods of birth control for men, have been developed?

Learning Goals
Economic Development in Asia
Chapter 8 – Population
Population Growth
World population has followed an ‘S’ shaped pattern of
growth over time; in antiquity, population growth was
very slow.
World population growth accelerated from the 18th

century through to the 19th century due to advances in
medicine.
It continues to grow strongly today.

Population Growth
• The strong growth in world population in more recent
times (beginning from the mid-1900s) is mainly due to
high growth rates in developing countries
• Asian countries contribute significantly to the sustained

boom in the world’s population today
Population Growth:
Some Basic Concepts
Birth rate = number of births per thousand people per
year
Death rate = refer to number of deaths per thousand

people per year
Population growth rate = birth rate – death rate

Population Growth:
Some Basic Concepts
• Among Asian economies, Pakistan, Malaysia and the
Philippines stand out as having the highest population
growth rates in 2001 (see Table 8.1)
• Japan, Hong Kong, PRC, Thailand and Singapore are

the countries with the lowest population growth rates –
around 1 percent per year or less
Population Growth:
Some Basic Concepts
• Age distributions show what proportion of the
population is in certain age categories
• Asia and Latin America have very similar age

distributions. Europe and North America also have
similar age distributions
In Asia and Latin America, proportion under 15 is

about one third of the population. This group is
much smaller in Europe and North America –
around one fifth.
Population Distribution:
Some Basic Concepts
Life expectancy rate is the average number of years a person is
expected to live.
Total fertility rate (TFR) is the total number of children a woman

is expected to have over her lifetime.
Infant mortality rate (IMR) pertains to the number of infant deaths

per 1000 live births.
TFR and population growth rates are positively correlated
Life expectancy and TFR are generally inversely related

Theory of Demographic Transition
• Stage 1: High birth and death rates
• Stage 2: High birth rates and falling death rates
• Stage 3: Low birth and death rates

• Thus, population growth is high in the second stage, and
lower in the first and third stages
Theory of Demographic
Transition
• The demographic transition in early Europe was slow
• In general, demographic transition in the now industrialized countries took many years,
even centuries, to occur.
• Why?
• Slow response of birth rates to changes in death rates
• Slow changes in social norms, particularly in traditional societies
• Inertia from movement from triangular distribution of population to a more

rectangular distribution of population
Theory of Demographic
Transition
• In the developing countries of today, demographic transition is
seen to occur more rapidly.
• Stage 2 is responsible for the dramatic increase in world
population
• in the last two hundred years
Economics of Fertility
In a traditional supply-demand framework, the decision to
have a child is treated like the decision to purchase any good
As in Fig. 8.6, the demand for children will increase if the cost
of children declines, and fall if the cost of children goes up
The cost of children includes all opportunity costs, that is,

all direct costs (e.g. food, housing, clothing, school fees) and
all indirect costs (e.g. income foregone by the carer-parent)
In Becker’s microeconomic model of
fertility (Fig 8.7), demand for children are
positively related to household income and
wealth; and negatively related to the value
or price of children relative to other goods.
A substitution effect occurs between the

quality and quantity of children, where an
increase in the price of one will cause an
increase in the demand for the other.
• In poorer countries, the opportunity costs are deemed low and
the perceived benefits higher. This follows from the fact that
children stay in school for less number of years, and often start to
earn money or help in the farm at very young ages.
• In richer countries, the anticipated cost of having children is

higher since more education is the norm and children are often not
allowed to work (legally) until age 15, at the earliest.
• Why is there high demand for children in developing countries?
• Old age support: children are relied on to support parents in their old
age.
•  developing and/or strengthening the country’s social

security system can serve to lower demand for larger families
• low opportunity costs for women.
•  women’s education and job opportunities may be a

powerful policy instrument for lowering fertility rates
Economics of Fertility:
Empirical Results
• Micro-studies show that female education
beyond four years of elementary education
have a strong negative effect on fertility
• Studies also show that when the labor force

participation rate of women goes up fertility
falls
• When the difference between child wages and

mother’s wages goes up, fertility falls
Economics of Fertility:
Empirical Results
• The substitution effect between quality and quantity of
children implies that lower costs of education can
induce families to have smaller number of children who
they can send to school.
The Asian Experience
• For economies in the Asian region, dramatic changes in population
levels began to occur only from the early 1900s. Population
exploded just after WWII , particularly in the NIEs and the PRC.
• Beginning in the mid-1960s, population growth in the NIEs began to

fall dramatically at the same time that economic growth was
accelerating
The Asian Experience
• By the 1990s, many countries in Asia had completed the
demographic transition
• Countries with low fertility:
• PRC, NIEs, Sri Lanka & Thailand
• Countries with medium fertility:

• India, Indonesia, Malaysia, Philippines,
• Vietnam
• Countries with high fertility:

• Bangladesh, Cambodia, Laos,
• Nepal and Papua New Guinea
Policies to Reduce
Population Growth in Asia
• Thailand, Malaysia and Sri Lanka devoted most
resources to contraceptive use – supplying
information and subsidizing the cost.
• Other countries, such as India and PRC, used

incentive payments.
• Remark: In the Philippines, religious beliefs

have constrained the use of contraceptives. As
a result, population growth have remained
relatively rapid.
Policies to Reduce
Population Growth
Women’s education has also played an important role
in lowering fertility
Coercion has been used in India and PRC

Policies to Reduce
Population Growth
One child per family policy has been in force in China for over 20
years.
Families with more than one child face steep penalties, including loss
of government subsidies and loss of salary.
Policy raises ethical considerations,

particularly since there is a preference
for boys.
This has led to infanticide and abortion of

girl infants and fetuses.
Preference for males in India has led to

similar problems
Prospects for the Future
The “demographic dividend” is a term
coined to describe the demographic
transition when the working population is
growing faster than the child and adult
populations combined.
This means that the dependency rate

(non-working population over
working population) is falling.
•“Demographic Dividend”
• This demographic dividend trend is most evident in
East Asia, Thailand and Indonesia
• It is not as strong in South Asia where population growth

is still high
“Demographic Dividend”
• The demographic dividend is accentuated by an increase in the labor
force participation among women
• As populations age, the demographic dividend dissipates
• Population age structures will begin to look like an inverted triangle
• This will take some time – Europe is still much “older” than Asia with the
exception of Japan (see Table 8.8)
Issues in Population Growth &
Control
• Many questions to be answered such as “Which population
control programs are most effective?” and “How should
resources be allocated to different programs?”
• Although we know that raising women’s educational attainment

works to reduce fertility and that some family planning interventions
work, a better data base for analyzing these population issues
needs to be developed.
Summary
• Basic concepts of population, and its effects
on economic development
• Economic model of fertility
• Population growth and demographic

transition in Asia
• Policies implemented to reduce population

growth

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# 08 Chapter 8: Population

FLEX Course Material

At the end of this module, the students are expected to have:

World population growth accelerated from the 18th

It continues to grow strongly today.

• Asian countries contribute significantly to the sustained

Death rate = refer to number of deaths per thousand

Population growth rate = birth rate – death rate

• Japan, Hong Kong, PRC, Thailand and Singapore are

• Asia and Latin America have very similar age

In Asia and Latin America, proportion under 15 is

Total fertility rate (TFR) is the total number of children a woman

Infant mortality rate (IMR) pertains to the number of infant deaths

TFR and population growth rates are positively correlated

Life expectancy and TFR are generally inversely related

• Stage 1: High birth and death rates

• Stage 2: High birth rates and falling death rates

• Stage 3: Low birth and death rates

• Slow response of birth rates to changes in death rates

• Slow changes in social norms, particularly in traditional societies

• Inertia from movement from triangular distribution of population to a more

The cost of children includes all opportunity costs, that is,

A substitution effect occurs between the

• In richer countries, the anticipated cost of having children is

•  developing and/or strengthening the country’s social

• low opportunity costs for women.

•  women’s education and job opportunities may be a

• Studies also show that when the labor force

• When the difference between child wages and

• Beginning in the mid-1960s, population growth in the NIEs began to

• Countries with medium fertility:

• Countries with high fertility:

• Other countries, such as India and PRC, used

• Remark: In the Philippines, religious beliefs

Coercion has been used in India and PRC

Policy raises ethical considerations,

This has led to infanticide and abortion of

Preference for males in India has led to

This means that the dependency rate

• It is not as strong in South Asia where population growth

• As populations age, the demographic dividend dissipates

• Population age structures will begin to look like an inverted triangle

• Although we know that raising women’s educational attainment

• Economic model of fertility

• Population growth and demographic

• Policies implemented to reduce population

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