Economic question
eason7237
Lect11s19Pop2.pptxLecture 11 Population2
S19
Review
Total fertility rate; how is it defined?
Suppose the TFR in Bangladesh in 2000 is 3.0 in 2010; does this mean that girls aged 15 in 2010 will have on average 3.0 children during their childbearing years? Do you think they will have more or less than 3.0 children?
Economic theory of fertility Becker theory
Benefits of children
1. psychological (enjoyment); maintain family line or name (sons?)
2. earning power of children; help on the farm
3. support in parents’ old age
Becker theory, cont.
4. quality-quantity trade-off; benefits of high-quality children vs benefits of more kids; child output = quantity times quality; 2 healthy smart kids is same child output as 4 ordinary kids; child output = total expenditure on kids
5. Income and substitution effects; perhaps child output is a “normal good”; what effect on fertility of unexpected inheritance?
Economic theory of fertility
Costs of children
1. food, housing, clothing
2. health care, education
3. opportunity cost of parents’ time
4. child care expenses
How do benefits and costs change with economic development?
What are the effects on fertility of:
1. higher wages for men
2. higher wages for women
3. urbanization
4. financial development (savings accounts; social security)
5. more schooling for women (Fig. 7.5)
6. What else has caused fertility to fall?
Economics of Development, 7th Edition
Copyright © 2013, W.W. Norton & Company
7
How do benefits and costs change with economic development?
7. higher rate of return to schooling; what determines the quantity-quality choice? Education of parents may affect their preference for well-educated children
Returns to schooling and fertility
Higher return to schooling should increase the amount parents spend on schooling of each child; this raises the “quality” of the child and makes each child more expensive; hence fertility should fall
CK12 Pop1
Would free contraceptives reduce fertility?
Arguments against this proposition
1. Fertility declines in 19th century Europe occurred without modern contraceptives
2. Cost of contraceptive: a few cents; cost of raising a child: many times more
3. Contraceptives are not readily available; but this may be because of lack of demand
4. Desired fertility and actual fertility (slide from Weil textbook)
Figure 4.12 Desired Fertility versus Total Fertility Rate in Developing Countries
Population Growth and Economic Development
Does pop growth reduce the growth in per capita income? Naïve view; Sources of growth
Capital deepening in Solow model
Demographic dividend; dependency ratio for children and for the elderly. East Asian growth; perhaps 1/3 due to dividend
Population size and per capita income
Population optimists and pessimists
Benefits of larger size; economies of scale, more geniuses
Negative effects of larger size; natural resource constraints; land, water, environment
Effects on wages and rents; effects on income distribution
Population Policy
If you want to reduce fertility, which policies would be more effective? That depends on your theory of fertility
Strong advocate of the Economic Theory: Pritchett article 1994; controlling for desired fertility, contraceptive prevalence had little effect on fertility
Population Policy
Message from Pritchett and his like: change incentives of families
Education of girls
Remove legal barriers to women working outside the home
Financial development and social security
Matlab program
Broader perspective than Becker theory
Family planning programs
Matlab program (controlled experiment) in Bangladesh; dramatic reduction in fertility over 20 years; health and education benefits as well
See Perkins p. 248
Matlab program
Women were visited at home, with husband at work; main effect was probably to change women’s autonomy and preferences
But the program was very expensive; not feasible to scale it up; Pritchett again
Household Bargaining
Ashraf paper 2014: Household bargaining and fertility in Zambia
Two treatments in the experiment: women were visited alone and given contraceptive not observable by husband, or husband was kept informed of visits and methods of contraception
Fertility lower in first case, but these women later reported less subjective wellbeing
Population Policy
Should fertility decisions be left to the choices of families?
Are there market failures? External effects of fertility choices?
Who in the family decides? Do fathers always act in the best interests of their wives and children?
Population Policy
Arguments for targeting poor families in family planning programs
1. They are more likely to be influenced
2. Fewer children grow up poor
3. Children of the poor have fewer siblings
4. Traditional culture has pro-natalist norms, which don’t benefit poor families
Practice 6a CK13 Pop2
Population Policy
Banerjee and Duflo, 2011, Poor Economics, Chap 5 on fertility; many interesting experiments are described
Study in Indonesia: regions with more clinics had lower fertility; but the decline in fertility was unrelated to the increase in clinics
Population Policy
Rise in household saving rate in China: 5% in 1978 to 34% in 1994
Do people act rationally? Kenya study of abstinence training
In Peru, squatters were given title to land; fertility declined only if the woman’s name was also on the title: bargaining power
Family Planning Programs
Family planning programs are associated with fertility declines; but what causes the declines? Is it development itself, or the programs?
Optional assignment: Tiloka da Silva and Silvana Tenreyo, Population Control Policies and Fertility Decline, posted on BB; possible paper topic
Da Silva article
Fertility seems to have declined more rapidly than would be explained by the changes in economic development
Fig 3 in the paper shows fertility by GDP per capita in 1960 and 1913
Debate: are parents rational and forward-looking? Have preferences changed? Did govt programs make a difference?
Da Silva article
Rapid fertility declines in East Asia, where govts supported fertility reduction (Singapore, Hkong, China…)
Early family planning programs in 1960s had little impact: resistance by religious figures and limited reach of health care systems
In 1974 family planning was attacked in some countries as an imperialist plot
Da Silva article
But Govt attitudes changed between 1970s and 1990s in LA and Middle East
India and Bangladesh govt pushed family planning with incentives for health workers to get mothers sterilized; heavily criticized
Brazil’s mil govt and Catholic Church opposed family planning but private organizations went ahead; telenovelas in Brazil
Da Silva article
By the 1990s most LDC govts featured family planning programs and mass media campaigns; slogans: two is enough, etc.
The article asks why fertility fell. Was it mainly the incentives in the economic theory, or changes in preferences of parents, brought on by the family planning programs?
Da Silva article
Effects of urbanization: rather modest; fertility declines in both urban and rural areas
Effects of women’s education: fertility declines among women at all levels of education
Infant mortality; strong effects across countries: where infant mortality fell, so did fertility; but why? Perhaps rapid pop growth stimulated family planning programs
