Economic Growth 5 - Future Population Trends

Question 1

Which tools are used in making long-range population forecast?

Answer 1

• The age-specific survivorship function

- The age-specific fertility function.

Question 2

What does the age-specific survivorship function describe?

Answer 2

The probability that a person of a given age will not die over the next year.

Question 3

What does the age-specific fertility function describe?

Answer 3

The probability that a woman of a given age will bear a child over the next year.

Question 4

The starting point to using the age-specific survivorship and age-specific fertility functions to make population forecasts is a breakdown of the population into the number of people of each age in a particular year. To forecast population in the next year, where do we begin?

Answer 4

To forecast population in the next year, we begin by aging the population, making an adjustment for mortality.
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Question 5

How can we age the population, making an adjustment for mortality?

Answer 5

For example: We determine the number of 21-year-olds in 2001 by starting with the number of 20-year-olds in 2000 and then adjusting for the fact that some will have died over the course of the year. This information on the likelihood of survival is contained in the survivorship function. We can use the same calculation to determine the number of people in all other age groups, except those aged 0 in the year 2001 - that is, those born that year..

Question 6

How do we find the amount of children being born, i.e. those aged 0 in our population aging example?

Answer 6

To get this number, we apply the age-specific fertility rate to the number of women in each age group in the year 2000.

Question 7

How do we get population forecasts from fertility and mortality functions?

Answer 7

Summing up the people of each age in 2001 gives the total population in that year; those from the survivorship function plus those from the fertility function. By carrying this process forward year by year, we can forecast the population far into the future.

Question 8

To forecast the population of a particular country or region, what must we also account for?

Answer 8

Immigration and emigration.

Question 9

What is the difficulty with forecasting using the method developed in this chapter?

Answer 9

The difficulty with forecasting using this method is in projecting how mortality and fertility will change in the future.

Question 10

An important lesson from Chapter 4 was that changes in mortality have been just as important as changes in fertility in determining population growth in the past. Why is that?

Answer 10

Until recent improvements in life expectancy, the probability that a newborn girl would live through her childbearing years was far below 100%. Improvements in mortality thus significantly raised the net rate of reproduction (NRR).

Question 11

In forecasting future changes in population growth, however, mortality changes are likely to have much less effect than in the past. Why is that?

Answer 11

The fraction of girls living through their childbearing years is already so close to 100%.

Question 12

Changes in mortality do have another effect on the size of population. What is it?

Answer 12

If the number of births does not change but people live longer, then more people will be alive at any given time. Even in countries where there is minimal scope for further improvement in the mortality of women in their childbearing years, this sort of improvement in the mortality at older ages will still be relevant.

Question 13

What are forecasts of fertility are often made in relation to?

Answer 13

Replacement fertility

Question 14

What is Replacement fertility?

Answer 14

The level of fertility that is consistent with a constant population size in the long run.

Question 15

What is Total Fertility Rate consistent with zero population growth?

Answer 15

Even in the most developed countries, there is some mortality before women’s childbearing years, and slightly more boys are born than girls. Therefore, the total fertility rate (TFR) consistent with zero population growth is higher than 2.0.

Question 16

What is replacement fertility in developed vs non developed countries today?

Answer 16

In the most developed countries, the replacement level of fertility is roughly 2.1 children per woman. In the developing world, where mortality is higher, replacement fertility is somewhat higher, although improvements in mortality rates in the recent decades mean that it is not much higher.

Question 17

Beyond the costs in terms of suffering and death of those infected and the grief of survivors, what are the economic effects of AIDS?

Answer 17

The negative effects of the disease on growth run primarily through the human input into production. Workers who are HIV-positive cannot supply as much labor as those who are disease-free.

Question 18

Which factor of production does aids inhibit and how does it do so?

Answer 18

Human capital.
Children’s education has taken second place to parents’ medical expenses.
The epidemic has also left behind a large number of orphans, who often do not receive the same educational investment as other children.

Question 19

What is a potential offset to these negative economic effects of HIV/AIDS?

Answer 19

The decrease in population growth as a result of the disease. Beyond purely biological effects (higher death rates and infected women’s reduced ability to bear children), HIV further lowers population growth by encouraging the use of condoms, which also serve as contraception.

Question 20

What is the total fertility rate in developed vs non developed countries today?

Answer 20

The average TFR in the Organisation for Economic Co-operation and Development (OECD) group of wealthy nations in 2009 was 1.74 children per woman. But within this group there was broad variation.

Question 21

Apart from reducing the number of births, what is another feature of low fertility?

Answer 21

Low fertility will also raise the average age of the population.

Question 22

The dramatically low levels of fertility in many advanced countries are a great source of concern. A TFR of 1.3 as seen in South Korea today, if it remains unchanged, implies that the population will fall by roughly one-third per generation. However, a closer look at the numbers reveals that a low TFR does not necessarily imply that women are having fewer children. How so?

Answer 22

The source of the confusion is the effect that a rise in the average age of childbirth can have on the measured TFR. This is

Weil, David. Economic Growth: International Edition (p. 129). Taylor and Francis. Kindle Edition. The source of the confusion is the effect that a rise in the average age of childbirth can have on the measured TFR. This is

Weil, David. Economic Growth: International Edition (p. 129). Taylor and Francis. Kindle Edition. The source of the confusion is the effect that a rise in the average age of childbirth can have on the measured TFR. This is

Weil, David. Economic Growth: International Edition (p. 129). Taylor and Francis. Kindle Edition. The source of the confusion is the effect that a rise in the average age of childbirth can have on the measured TFR. This is

Weil, David. Economic Growth: International Edition (p. 129). Taylor and Francis. Kindle Edition. The source of the confusion is the effect that a rise in the average age of childbirth can have on the measured TFR. This is called the tempo effect.

Question 23

Give an example of the tempo effect.

Answer 23

Suppose that in a given country, every woman decided in the same year that she would delay all of her childbearing by one year. in the year after women had made this decision to delay childbearing, no children would be born; the TFR would be zero. In the following year, however, the TFR would return to its level before the delay in childbearing.

Question 24

Which error may a demographer make in looking at the data on the TFR from this country during the year following the decision to delay, i.e. in the presence of the tempo effect?

Answer 24

A demographer might conclude that women had decided to stop having babies. Eventually, however, every woman would have the same number of babies that she would have had previously.

Question 25

How will a delay in childbearing affect TFR?

Answer 25

A delay of x% of a year in childbearing will reduce the TFR by x% of its original level.

Question 26

When we consider the data on TFR in the wealthy countries, what is a natural question given our new found knowledge about the tempo effect?

Answer 26

Whether this sort of delay in childbearing can explain the reduction in TFR below the replacement level that has been observed in the data. It is certainly true that in most of the developed world, the age of childbearing is rising.

Question 27

What is the first assumption underlying the UN’s population estimates?

Answer 27

That fertility in the developing world will decline to the point where most countries are at the replacement rate by 2050.

Question 28

What is the second assumption underlying the UN’s population estimates?

Answer 28

The UN is assuming that many poor countries, will achieve replacement fertility at a level of income far lower than most countries had when they reached replacement fertility in the past.

Question 29

Why is there certainly no reason to think that countries achieving replacement fertility at a level of income far lower than most countries had when they reached replacement fertility in the past is impossible?

Answer 29

Because the income level at which countries have been achieving replacement fertility has indeed been falling over time.

Question 30

In Chapter 4 we saw that a country that achieves a NRR of 1—in other words, each girl that is born produces one daughter—will eventually have a population growth rate of zero. However, the word eventually is important. A country with an NRR of 1 will not necessarily have a population growth rate of zero right away. Why is that?

Answer 30

The reason is that the number of children born depends on two things: the rate at which women are having babies and the number of women who are in their reproductive years. If the number of women in their reproductive years rises, then the number of babies born also will rise, even if the rate at which women are having babies stays constant. This is know as demographic momentum.

Question 31

To see the importance of demographic momentum, consider a country with high fertility and rapid population growth. The number of children born each year will increase rapidly. As a result of this rising number of births, there will be many more people in young age groups than in older age groups. Now suppose that the fertility rate falls suddenly to the level that would be consistent with an NRR of 1. What would happen.

Answer 31

Initially the number of babies born each year will decline because each woman in her reproductive years will be having fewer children. But over time the number of babies born will rise, for the simple reason that the number of women in their reproductive years will continue to rise. Only after several generations will the effect of this demographic momentum wear off, at which point the growth rate of population will be zero.

Question 32

Where does demographic momentum tend to be highest?

Answer 32

Demographic momentum tends to be highest in the countries in which fertility is highest.

Question 33

Demographic momentum tends to be highest in the countries in which fertility is highest. Thus, in these countries, population growth in the future will be high for which 2 reasons?

Answer 33

The TFR is high to begin with, and even if the TFR were to fall, demographic momentum would keep population growth high.

Question 34

What is a useful measure of the extent of demographic momentum?

Answer 34

The fraction of the population under age 15.

Question 35

Why are countries with a large fraction of the population under the age of 15 almost guaranteed to have rising population for the next several decades?

Answer 35

Because of the increase in the number of women in their childbearing years.

Question 36

Although demographic momentum tells us much about population growth in the next several decades, its importance diminishes when we look further into the future. Over the very long run, What is the most important determinant of population growth?

Answer 36

Fertility

Question 37

Demographer Joel Cohen collected 65 estimates, published between 1679 and 1994, of how many people the earth can support. They ranged from fewer than a billion to more than a trillion. In discussing these forecasts, Cohen makes three important points. What’s the first?

Answer 37

How many people the earth can support depends on what standard of living those people will have. It is therefore illogical to ask how many people the earth can support without asking at what standard of living.

Question 38

Demographer Joel Cohen collected 65 estimates, published between 1679 and 1994, of how many people the earth can support. They ranged from fewer than a billion to more than a trillion. In discussing these forecasts, Cohen makes three important points. What’s the second?

Answer 38

There is the issue of sustain-ability. Perhaps a high population can be supported only by using up stocks of natural resources. It is therefore possible that even though the planet supports 7 billion people now, it would not be able to support such a number in the long run.

Question 39

Demographer Joel Cohen collected 65 estimates, published between 1679 and 1994, of how many people the earth can support. They ranged from fewer than a billion to more than a trillion. In discussing these forecasts, Cohen makes three important points. What’s the third?

Answer 39

There is the question of what level of technology we are considering. The current world population of 7 billion certainly could not have been sustained at a subsistence level, let alone at its current level, using the technologies that existed 200 years ago.

Question 40

Where does the argument against the persistence of high population growth far into the future come from?

Answer 40

The observation of the power of compounding. if population were to continue to grow at a rate of 1% per year (which is below its current growth rate), it would reach roughly 45 billion by the year 2200 and 1 trillion by 2512. Such an outcome strikes many people as impossible, although given the great uncertainty involved in long-run forecasting, one should never be too confident.

Question 41

To analyze the effect of demographic change on economic growth, where should we begin?

Answer 41

By looking at how the slowdown in the growth rate of population will affect output, using techniques developed in Chapter 4.

Question 42

As we have seen, the growth of world population over the period 2000–2050 (0.9% per year) is forecast to be only half as rapid as over the previous 50 years (1.8% per year). How will this be felt across the world?

Answer 42

The decline in growth will be most extreme in the group of less developed countries, where the growth rate will fall by almost two-thirds. There will also be a large reduction in population growth, all the way to zero, among the richest countries. Among the least developed countries, population growth will fall only slightly, owing to the combination of high fertility and demographic momentum.

Question 43

How can we apply our Solow model formulas to help predict how a slowing population growth would affect income?

Answer 43

We can apply the same formula to look at the effects of slowing population growth, but instead of interpreting the formula to show how income per worker differs between two countries, we now interpret it to show how income per worker compares at two points in time within a single country (or within a group of countries).

Question 44

Given our modified y1ss/y2ss comparison, what is the effect of a population slowdown

Answer 44

A slowdown in population growth, by reducing the effect of capital dilution, will raise the pace of economic growth. However, even as population growth slows, the level of population will continue to rise.

Question 45

What is one of the most important ongoing demographic changes?

Answer 45

The aging of the population.

Question 46

The current population aging results from both declining mortality and declining fertility. Explain how it results from declining mortality.

Answer 46

If each person lives to an older age, then it is obvious that the average age of the population will be greater.

Question 47

The current population aging results from both declining mortality and declining fertility. Explain how it results from declining fertility.

Answer 47

Reductions in the fertility rate lead to slower population growth, and by lowering the ratio of people born recently to people born further back in the past, a reduction in fertility causes an increase in the average age of the population.

Question 48

To see why population aging is relevant for economic growth, let’s return to a distinction we first made in Chapter 3: the difference between GDP per worker and GDP per capita. Elaborate.

Answer 48

When we think about how productive a country is, it is often natural to focus on GDP per worker. However, when we ask how well off a country is, the more relevant measure is the amount of output that is available for every person in the economy—that is, GDP per capita.

Question 49

Give the two equations for GDP per worker and GDP per capita and combine them.

Answer 49

GDP per worker = GDP/Number of Workers
GDP per capita = GDP/Total Population
Combining the two we get:
GDP per capita = GDP per worker X (Number of Workers/Total Population)

Question 50

GDP per capita = GDP per worker X (Number of Workers/Total Population)
This equation highlights two reasons that countries might differ in their levels of GDP per capita. What are they?:

Answer 50

Either they differ in their levels of GDP per worker, or they differ in their ratios of workers to total population.

Question 51

Why is one of the important determinants of a country’s ratio of workers to total population is its demographic situation?

Answer 51

Because children and elderly people have low rates of labor force participation, the fraction of the population that works is greatly influenced by the fraction of the population that is of working age.

Question 52

How can we transform GDP per capita = GDP per worker X (Number of Workers/Total Population) into a version using growth rates?

Answer 52

We assume that the fraction of the population that works grows at the same rate as the fraction of the population that is of working age: growth rate of GDP per capita = growth rate of GDP per worker + growth rate of working-age fraction of population.

Question 53

As an example of how to use this equation, consider the coming decline in the fraction of the working-age population in the United States. Over the period 2010–2030, this fraction is forecast to fall from 0.60 to 0.54. The annual growth rate of the working-age fraction will be:

Answer 53

Growth rate of the working-age fraction = (0.54/0.60)^(1/20)-1 = 0.5%

Question 54

Describe the current global population aging situation.

Answer 54

In general, the most developed countries, in which fertility reduction took place earliest, have already been through a period in which the working-age fraction rose, and in the next several decades will be facing a declining working-age fraction. In many developing countries, declining fertility over the last several decades is still producing a rise in the fraction of the population that is of working age.

Question 55

What is a final effect of how population aging will affect the future income in high fertility countries?

Answer 55

In many countries in which fertility is still high, declining fertility promises a boost to growth of GDP per capita sometime in the future.

Question 56

In addition to its effects on GDP per capita, population aging may change the nature of society itself. How so?

Answer 56

Teenagers and young adults account for the vast majority of criminals, for example, so as society ages, crime rates may fall. But young people also account for much of a society’s dynamism. Shifts in relative population sizes of this magnitude are bound to have immense political and economic ramifications.

Question 57

What’s the reason that the average level of GDP per capita in the world does not grow as quickly as the average in each country?

Answer 57

The balance of population is shifting toward poorer countries. This effect of population redistribution reducing the average growth rate of income in the world is called the composition effect.

Question 58

The fact that the fraction of the world’s population living in currently rich countries will fall does not mean that the fraction of the world’s population living in rich countries will fall. Why not?

Answer 58

More countries are becoming rich over time. Thus, the overall balance between rich people and poor people in the world depends on which force is more powerful: the higher population growth rates of poor countries or the income growth that takes place in these poor countries.

Question 59

Changes in relative population sizes among countries will have numerous effects on international relations. What is one area in which it is possible to measure the outcome of international competition?

Answer 59

The Olympics.

Question 60

How are the Olympics one area in which it is possible to measure the outcome of international competition?

Answer 60

Both high income per capita and high population should raise a country’s medal count.

Question 61

Why should having high income per capita raise a country’s medal count?

Answer 61

Rich countries earn more medals because their citizens have more time to devote to athletics, better facilities for training, and generally better health.

Question 62

Why should having a large population raise a country’s medal count?

Answer 62

High-population countries win more medals because in a larger population there are likely to be more superior athletes.

Question 63

How does slower population growth provide a boost to economic growth?

Answer 63

By reducing the need to provide new capital to new entrants into the labor force.