Population GrowthPopulation Growth

George Norton Agricultural and

Applied EconomicsVirginia Tech

AAEC 3204AAEC 3204

ObjectivesObjectives

Discuss nature of population growth in the world

Consider determinants and consequences of rapid population growth and urbanization

Population issues to be Population issues to be discusseddiscussed

Basic facts about population growth

Consequences of population growth

Causes of population growth

Policies to influence population growth and rural to urban migration

Has population Has population increased at a fairly increased at a fairly constant rate since constant rate since prehistoric times?prehistoric times?

B.C. Today

World PopulationWorld PopulationNumber of People

Time

0 3 million years ago

300 million 1 AD

500 million 1650

1 billion 1800

2 billion 1930

3 billion 1960

4 billion 1975

5 billion 1987

6 billion 1999

World PopulationWorld Population

• What is the present world population?

• What is the current growth rate and is the growth rate currently at its historical peak?

1800 1850 1900 1950 2000 2050 2100 2150

12

11

10

9

8

7

6

5

4

3

2

1

0

Past and projected World population

When would world population double at When would world population double at the current growth rate?the current growth rate?

Is the growth rate likely to remain at Is the growth rate likely to remain at 1.2 percent? Why or why not?1.2 percent? Why or why not?

70/1.2 = 58 years

Why has population increased Why has population increased faster in developing countries faster in developing countries today that it did in early stages today that it did in early stages of U.S. development?of U.S. development?

Are population growth rates more Are population growth rates more likely to increase rather than likely to increase rather than

decrease over the next 10 years?decrease over the next 10 years?

Decrease

When will the world population stop When will the world population stop growing and at what population?growing and at what population?

Maybe in 2150 at 10.5-11.5 billion;

By 2050, expect about 9 billion

Why does population grow when Why does population grow when growth growth ratesrates are declining? are declining?

Recent rapid growthmeans young population with many in child bearing years

Population pyramidPopulation pyramid

1) Determinants of birth rates

2) Economic factors important in affecting birth rates

3) Consequences of rapid population growth

Let’s examine:Let’s examine:

Determinants of birth ratesDeterminants of birth rates

Income (economic factors)

Culture and social factors

Birth control Education Religion Wars

Why are economic factors Why are economic factors important in affecting birth rates?important in affecting birth rates?

Children provide labor in agriculture

Children provide social security

Children are a consumption good

Income implies value of time so number of children

Quantity / quality tradeoff

In what sense is population In what sense is population growth a substitute for growth a substitute for missing institutions and missing institutions and

markets?markets?

Missing Institutions and marketsMissing Institutions and markets

InsuranceInsurance• MedicalMedical• Life insuranceLife insurance• DisabilityDisability• Natural disasterNatural disaster• TheftTheft

Social securitySocial security• GovernmentGovernment• Employer Employer

Gender biasGender bias

Culture and inheritance lawsCulture and inheritance laws Low female wages reduces Low female wages reduces

opportunity cost of childrenopportunity cost of children Education of femalesEducation of females

ExternalitiesExternalities

What externalities might be involved What externalities might be involved with fertility choices and why? with fertility choices and why? • Costs of certain public goods such as Costs of certain public goods such as

schools and infrastructure might exceed schools and infrastructure might exceed private costs private costs

• Environmental effectsEnvironmental effects• Family structureFamily structure

What are the consequences of What are the consequences of rapid population growth?rapid population growth?

NegativeNegative• FoodFood• Difficult to educateDifficult to educate• EnvironmentEnvironment• Age dependencyAge dependency• JobsJobs• Capital shallowingCapital shallowing• Investment Investment

diversiondiversion

PositivePositive• LaborLabor• Economies of scaleEconomies of scale• MarketMarket• Intellectual base for Intellectual base for

ideas and ideas and innovationsinnovations

• Effect on demand Effect on demand for technologiesfor technologies

What are some policies that What are some policies that influence population growth?influence population growth?

Policies for social and economic improvement

Social security system

Family planning

Female education

Urbanization also increasing Urbanization also increasing with rural to urban migration with rural to urban migration

• Nature of migration

• Why migration occurs

• Consequences

• Policy implications

Rural to urban migrationRural to urban migration

1980’s and 90’s– population growth in LDC’s averaged 2.1%

But, urban population growth averaged 3.5% (in many countries, 6 to 8%)

Why is rural to urban migration Why is rural to urban migration good and why is it bad?good and why is it bad?

Good• Labor for industry (efficient use of resources)• Education: costs and benefits• Larger markets

Bad• Unemployment• Housing & Public services• Environment

Why do people migrate from Why do people migrate from rural to urban areas?rural to urban areas?

Economic factors• Benefits of move• Costs of move• Planning horizon

Social & cultural factors

Who tends to migrate?Who tends to migrate?

Age of migrants? Young

Education of migrants? Better educated

Marital status of migrants? Single

Harris-Todaro Model of Harris-Todaro Model of MigrationMigration

• Potential migrants evaluate the “potential” or expected gains from migration versus the costs

• Expected gains: real income differential times the probability of receiving a job offer

• Probability is inversely related to the rate of unemployment

• Migration rates in excess of urban job growth rates are expected in this model

What is the urban What is the urban informalinformal sector?sector?

Why is the informal sector both good and bad for developing

countries?

What policies can affect rural What policies can affect rural to urban migration?to urban migration?

• Improve services in rural areas (education, health, etc.)

• Remove bias in economic policies

• Jobs in rural areas

ConclusionsConclusions

• Population growth and R-U migration have been rapid in developing countries in recent years

• Many causes but several are economic and institutional

• Effects are positive and negative• Public policies can influence pop

growth and R-U migration rates