Population, Migration and Development in Development Economics

University of New England Week 5

Population, Migration and Development Week 5 Prescribed Reading: de Janvry and Sadoulet, chs. 11 and 12. ECON390/590 Economics of Developmentune

Learning Objectives Week 5

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1. Definitions: Demographic concepts
2. Demographic transition
3. Causes of population growth
4. Population policy
5. Other issues in population and development
6. Labour and employment
7. Rural-urban migrationune

Demographic Concepts Definition

The crude birth rate of a population is the number of live births per 1,000 people per year. The crude death rate of a population is the number of deaths per 1,000 people per year. The infant mortality rate is the number of deaths of children less than a year old per 1,000 live births. Life expectancy at birth. The total fertility rate (TFR) is the average number of children that will be born to a woman in a population during her reproductive years (15 to 49). The replacement fertility rate for zero growth of a population is 2.1.une

Age-Gender Population Pyramids

Population is rapidly growing in Kenya, slowing down in China, stagnant in the US, and shrinking in Japan.

Population Dividend and Dependency Ratios

Countries with high population growth rates have high dependency ratios, which refer to the ratio of non-working-age to working-age population. The youth dependency ratio is the number of people 0 to 14 years old relative to the number of people 15 to 64 years old. The elderly dependency ratio is the number of people 65 years old and above relative to the number of people 15 to 64 years old. The dependency ratio will be lowest when the population growth rate is declining while there are still few elderly people to support. Population dividend: A one-time opportunity for a low dependency ratio, with the possibility of high rates of labour force participation and savings.

Stylised Facts for World Population

1. Population growth is generally considered to be too high in poor countries and too low in rich countries.
2. World population is rapidly becoming urbanised.
3. There are many megacities in the low- and middle-income countries.
4. The disease burden in SSA has had a huge toll on the population.

Demographic Transition Overview

The demographic transition is a one-time population explosion that occurs as death rates fall ahead of birth rates. It comes to an end when birth rates also decline, eventually converging with death rates. Industrialised countries have completed demographic transition. Developing countries are still experiencing demographic transition.

Malthus: The Dismal Economics of Hunger

Population growth is held in check not by demographic restraint, but by food scarcity and famines. Population grows at a geometric rate, while food availability grows at an arithmetic rate. There is a stable equilibrium, where the growth in food availability determines the growth of population.

Criticisms of The Malthusian Trap

Market failures were to blame rather than population explosion and absolute food scarcity. Declining fertility caused by changes in the logic of family size and the availability of contraception. Rising labour productivity can induce a demographic transition by reducing the birth rate. Technological change in food production, allowing food availability to grow exponentially. Markets and states can avert the Malthusian trap through technological innovation and institutional innovation.une

Determinants of Decline in Fertility

Declining TFR can come from an increase in the age of marriage or from a decline in marital fertility. Incentives can affect fertility rates if the following preconditions hold:

1. Fertility outcomes are subject to wilful choice
2. Fertility decisions are determined by the calculus of advantage (utility maximisation).
3. Some methods of fertility control are available, ranging from inefficient to efficient.une

Calculus of Economic Advantage for Children

In deciding how many children to have, parents consider three types of benefit:

1. A child is a source of income.
2. A child is a source of insurance.
3. A child is a source of satisfaction.une

TFR Hypotheses: Price and Income Effects

Are children inferior goods? Becker hypothesises that: An income effect raises the demand for children. A price effect reduce the demand for children because of the rising opportunity cost of raising children. The net effect of rising income (positive), the rising price of children, changing tastes, and falling prices for consumer goods (all negative) may well be a decline in the demand for children as income rises. The declining birth rate and demographic transition mostly came from the negative effects on the demand for children.

Private and Social Benefits and Fertility Decisions

If positive externalities from having children => The socially optimum family size is larger than the private optimum => 1 TFR. If negative externalities from having children => The socially optimum family size is smaller than the private optimum => \TFR. sas

Policies to Increase TFR

Many Western European countries have introduced pro-birth policies, which are necessary when the social benefits of more children exceed private benefits. Some of these social benefits include: A growing labour force to support economic growth. Economies of scale in public goods provision. Enlarging the taxpayer base. Inter-generational transfers create positive externalities. Pro-TFR policies must equate social benefit and private cost.une

Policies to Decrease the TFR

A lower TFR may be socially desirable because: A high population growth rate reduces income per capita. Depressed real wage growth, leading to poverty trap. High youth dependency ratio, postponing demographic dividend. Under-provision of public goods Environmental degradation and other negative externalities in urban slumps Some TFR-reducing policies include reducing poverty, empowering women, and raising the relative price of children.une

Other Issues in Population and Development

1. The debate on missing women Some 60-100 million missing women in Asia. A preference for boys induces abortions that select against girls. Excess mortality of young girls can also be due to purposeful neglect. Missing women may create an unexpected incentive effect, raising economic growth (assortative mating).
2. Sibling rivalry If parents face financial constraints on their children's education and health, and if there is a preference for boys, then the demographic composition of the household will affect investment in human capital for each child. The best environment for human capital investment in girls is a family with girls only. For investment in boys, it is a family with sisters only.

Sibling Rivalry in Educational Resource Allocation

ELSEVIER Contents lists available at ScienceDirect China Economic Review journal homepage: www.elsevier.com/locate/chieco CHINA Economic Review - Schooling returns for migrant workers in China: Estimations from the perspective of the institutional environment in a rural setting Check for updates Yao Yaoc, George S. Chenª ** , Ruhul Salimb, Xiaojun Yud " UNE Business School, University of New England, Armidale, NSW 2351, Australia b School of Economics & Finance, Curtin University, Bentley, WA 6102, Australia School of Energy and Environment, City University of Hong Kong, Kowloon, Hong Kong SAR d Faculty of Business and Economics, Macquarie University, North Ryde, NSW 2109, Australia ARTICLE INFO JEL classifications: J21 J31 J61 Keywords: Schooling returns Instrumental variables Migrant workers Gender gap rural institutional environment ABSTRACT We examine schooling returns for migrant workers in China based on the 2009 Rural-Urban Migration in China (RUMiC) survey. Using a novel instrumental variable (IV) set based on the institutional environment unique to rural China, we find the point estimates of returns to lie within the range of 7.8%-10.7% for each additional year of schooling. Whilst our estimates are slightly higher than those reported for this cohort of workers in the literature, they are sig- nificantly lower than those enjoyed urban dwellers. Furthermore, we identify a wider gap in schooling retums between male (14.7%) and female (8.5%) migrant workers than the compar- able gap for urban dwellers. Our results provide another line of evidence supporting a segmented labor market in urban China and remain robust to different estimators and under various IV restrictions. We suggest that improving the education system in the rural areas and eliminating the gender gap among migrant workers represent the necessary steps for enhancing social har- mony in the Chinese society.