DEMOGRAPHY & DEVELOPMENT

The demographic transition has swept the world since the end of the nineteenth century. The unprecedented increase in population growth during the Post-Malthusian Regime has been ultimately reversed, bringing about significant reductions in fertility rates and population growth in various regions of the world.


The demographic transition has enabled economies to convert a larger portion of the gains from factor accumulation and technological progress into growth of income per capita. It enhanced labor productivity and the growth process via three channels. First, the decline in population growth reduced the dilution of the growing stocks of capital and infrastructure, increasing the amount of resources per capita. Second, the reduction in fertility rates permitted the reallocation of resources from the quantity of children toward their quality, enhancing human capital formation and labor productivity. Third, the decline in fertility rates affected the age distribution of the population, temporarily increasing the fraction of the labor force in the population and thus mechanically increasing productivity per capita.


This research develops the theoretical foundations and the testable implications of the various mechanisms that have been proposed as possible triggers for the demographic transition. Moreover, it examines the empirical validity of each of the theories and their significance for the understanding of the transition from stagnation to growth. In particular, it examines various mechanisms that have been proposed as possible triggers for the demographic transition and assesses their empirical significance in understanding the transition from stagnation to growth. Was the onset of the fertility decline an outcome of the rise in income during the course of industrialization? Was it triggered by the reduction in mortality rates? Was it fueled by the rise in the relative wages of women? Or was it an outcome of the rise in the demand for human capital in the second phase of industrialization? The analysis suggests that the rise in the demand for human capital in the process of development was the main trigger for the decline in fertility and the transition to modern growth.

TRIGGERS OF THE FERTILITY DECLINE:


DECLINE IN THE GENDER WAGE GAP

Galor, O., & Weil, D. N. (1996). The Gender Gap, Fertility, and Growth. American Economic Review, 86(3), 374-387.

This paper examines a novel mechanism linking fertility and growth. There are three components to the model: first, increases in capital per worker raise women's relative wages, since capital is more complementary to women's labor input than to men's. Second, increasing women's relative wages reduces fertility by raising the cost of children more than household income. And third, lower fertility raises the level of capital per worker. This positive feedback loop generates a demographic transition: a rapid decline in fertility accompanied by accelerated output growth.

TRIGGERS OF THE FERTILITY DECLINE:

RISE IN RETURN TO HUMAN CAPITAL

Galor, O., & Weil, D. N. (2000). Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond. American economic Review, 90(4), 806-828.

This paper suggests that technological acceleration in the process of development, and the associated rise of the return to human capital, induces parent to invest in human capital, inducing a reduction in fertility rate and the onset of the demographic transition

TRIGGERS OF THE FERTILITY DECLINE:

SELECTION OF PREDISPOSITION TOWARDS CHILD QUALITY

Galor, O., & Moav, O. (2002). Natural Selection and the Origin of Economic Growth. Quarterly Journal of Economics, 117(4), 1133-1191.

This research develops an evolutionary growth theory that captures the interplay between the evolution of mankind and economic growth since the emergence of the human species. The theory suggests that the struggle for survival that had characterized most of human existence generated an evolutionary advantage to greater predisposition towards child quality, triggering a substitution of quality for quantity and the onset of the demographic transition

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PACE OF THE FERTILITY DECLINE:


ASYMMETRIC EFFECTS OF TRADE ON THE RETURN TO HUMAN CAPITAL IN DC & LDC

Galor, O., & Mountford, A. (2008). Trading Population for Productivity: Theory and Evidence. Review of Economic Studies, 75(4), 1143-1179.

This research argues that the differential effect of international trade on the demand for human capital across countries has been a major determinant of the distribution of income and population across the globe. In developed countries the gains from trade have been directed towards investment in education and growth in income per capita, whereas a significant portion of these gains in less developed economies has been chanelled towards population growth. Cross-country regressions establish that indeed trade has positive effects on fertility and negative effects on education in non-OECD economies, while inducing fertility decline and human capital formation in OECD economies.

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EVALUATION OF DIFFERENT THEORIES OF THE DEMOGRAPHIC TRANSITION

Galor, O. (2012). The demographic transition: causes and consequences. Cliometrica, 6(1), 1-28.

This paper develops the theoretical foundations and the testable implications of the various mechanisms that have been proposed as possible triggers for the demographic transition. Moreover, it examines the empirical validity of each of the theories and their significance for the understanding of the transition from stagnation to growth. The analysis suggests that the rise in the demand for human capital in the process of development was the main trigger for the decline in fertility and the transition to modern growth.

MALTHUSIAN POPULATION DYNAMICS

Ashraf, Q., & Galor, O. (2011). Dynamics and Stagnation in the Malthusian Epoch. American Economic Review, 101(5), 2003-41.

his paper examines the central hypothesis of the influential Malthusian theory, according to which improvements in the technological environment during the preindustrial era had generated only temporary gains in income per capita, eventually leading to a larger, but not significantly richer, population. Exploiting exogenous sources of cross-country variations in land productivity and the level of technological advancement, the analysis demonstrates that, in accordance with the theory, technological superiority and higher land productivity had significant positive effects on population density but insignificant effects on the standard of living, during the time period 1-1500 CE.

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