Advanced Search
MyIDEAS: Login to save this paper or follow this series

Growth vs. level effect of population change on economic development: An inspection into human-capital-related mechanisms

Contents:

Author Info

  • Raouf BOUCEKKINE

    ()
    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES), Center for Operations Research and Econometrics (CORE) and GREQAM,Aix-Marseille University, France)

  • B. MARTINEZ

    ()
    (Department of Economics, Universidad Complutense de Madrid (Spain))

  • J. R. RUIZ-TAMARIT

    ()
    (Department of Economic Analysis, Universitat de Valencia (Spain), and Department of Economics, Université Catholique de Louvain (Belgium) (IRES))

Abstract

This paper studies the different mechanisms and the dynamics through which demography is channelled to the economy. We analyze the role of demographic changes in the economic development process by studying the transitional and the long-run impact of both the rate of population growth and the initial population size on the levels of per capita human capital and income. We do that in an enlarged Lucas-Uzawa model with intergenerational altruism. In contrast to the existing theoretical literature, the long-run level effects of demographic changes, i.e. their impact on the levels of the variables along the balanced growth path, are deeply characterized in addition to the more standard long-run growth effects. We prove that the level effect of the population rate of growth is non-negative (positive in the empirically most relevant case) for the average level of human capital, but a priori ambiguous for the level of per capita income due to the interaction of three transmission mechanisms of demographic shocks, a standard one (dilution) and two non-standard (altruism and human capital accumulation). Overall, the sign of the level effects of population growth depend on preference and technology parameters, but numerically we show that the joint negative effect of dilution and altruism is always stronger than the finduced positive human capital effect. The growth effect of population growth depends basically on the attitude to intergenerational altruism and intertemporal substitution. Moreover, we also prove that the long-run level effects of population size on per capita human capital and income may be negative, nil, or positive, depending on the relationship between preferences and technology, while its growth effect is zero. Finally, we show that the model is able to replicate complicated time relationships between economic and demographic changes. In particular, it entails a negative effect of population growth on per capita income, which dominates in the initial periods, and a positive effect which restores a positive correlation between population growth and economic performance in the long term.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://sites.uclouvain.be/econ/DP/IRES/2011039.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2011039.

as in new window
Length: 47
Date of creation: 28 Oct 2011
Date of revision:
Handle: RePEc:ctl:louvir:2011039

Contact details of provider:
Postal: Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium)
Fax: +32 10473945
Email:
Web page: http://www.uclouvain.be/ires
More information through EDIRC

Related research

Keywords: Human Capital; Population Growth; Population Size; Endogenous Growth; Level Effect; Growth Effect;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Ana Hidalgo & Amparo Castelló-Climent, 2010. "Quality and Quantity of Education in the Process of Development," 2010 Meeting Papers 238, Society for Economic Dynamics.
  2. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
  3. Robert J. Barro & Gary S. Becker, . "Fertility Choice in a Model of Economic Growth," University of Chicago - Population Research Center 88-8, Chicago - Population Research Center.
  4. Raouf Boucekkine & B. Martínez & J. R. Ruiz-Tamarit, 2007. "A note on global dynamics and imbalance effects in the Lucas-Uzawa model," Working Papers 2007_26, Business School - Economics, University of Glasgow.
  5. Canton, E.J.F. & Meijdam, A.C., 1997. "Altruism and the macroeconomic effects of demographic changes," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73873, Tilburg University.
  6. Nerlove, Marc & Razin, Assaf & Sadka, Efraim, 1985. "Population Size: Individual Choice and Social Optima," The Quarterly Journal of Economics, MIT Press, vol. 100(2), pages 321-34, May.
  7. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," Working papers 527, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Caballe, Jordi & Santos, Manuel S, 1993. "On Endogenous Growth with Physical and Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1042-67, December.
  9. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  10. Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
  11. Mulligan, Casey B & Sala-i-Martin, Xavier, 1993. "Transitional Dynamics in Two-Sector Models of Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 739-73, August.
  12. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  13. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
  14. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
  15. Gary S. Becker & Kevin M. Murphy & Robert Tamura, . "Human Capital, Fertility, and Economic Growth," University of Chicago - Population Research Center 90-5a, Chicago - Population Research Center.
  16. Strulik, Holger, 2002. "The Role of Human Capital and Population Growth in R&D-Based Models of Economic Growth," Royal Economic Society Annual Conference 2002 170, Royal Economic Society.
  17. Robertson, Peter E., 2002. "Demographic shocks and human capital accumulation in the Uzawa-Lucas model," Economics Letters, Elsevier, vol. 74(2), pages 151-156, January.
  18. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
  19. Raouf Boucekkine & Giorgio Fabbri, 2010. "Assessing the Parfit's Repugnant Conclusion within a canonical endogenous growth set-up," Working Papers 2010_20, Business School - Economics, University of Glasgow.
  20. Gary S. Becker & Robert J. Barro, 1986. "A Reformulation of the Economic Theory of Fertility," NBER Working Papers 1793, National Bureau of Economic Research, Inc.
  21. Yip, Chong K. & Zhang, Junxi, 1996. "Population growth and economic growth: A reconsideration," Economics Letters, Elsevier, vol. 52(3), pages 319-324, September.
  22. Raouf, BOUCEKKINE & José R. , RUIZ-TAMARIT, 2004. "Special functions for the study of economic dynamics : The case of the Lucas-Uzawa model," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004026, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  23. Bucci, Alberto, 2008. "Population growth in a model of economic growth with human capital accumulation and horizontal R&D," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1124-1147, September.
  24. Kelley, Allen C, 1988. "Economic Consequences of Population Change in the Third World," Journal of Economic Literature, American Economic Association, vol. 26(4), pages 1685-1728, December.
  25. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  26. Gary D. Hansen & Edward C. Prescott, 1999. "Malthus to Solow," Staff Report 257, Federal Reserve Bank of Minneapolis.
  27. Dalgaard, Carl-Johan & Kreiner, Claus Thustrup, 2001. " Is Declining Productivity Inevitable?," Journal of Economic Growth, Springer, vol. 6(3), pages 187-203, September.
  28. David N. Weil & Oded Galor, 1999. "From Malthusian Stagnation to Modern Growth," American Economic Review, American Economic Association, vol. 89(2), pages 150-154, May.
  29. Nerlove, Marc & Razin, Assaf & Sadka, Efraim, 1982. "Population size and the social welfare functions of Bentham and Mill," Economics Letters, Elsevier, vol. 10(1-2), pages 61-64.
  30. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  31. Frederic Tournemaine, 2007. "Can population promote income per-capita growth? A balanced perspective," Economics Bulletin, AccessEcon, vol. 15(8), pages 1-7.
  32. Charles I. Jones, . "Growth: With or Without Scale Effects?," Working Papers 99001, Stanford University, Department of Economics.
  33. Kelley, Allen C. & Schmidt, Robert M., 1995. "Aggregate Population and Economic Growth Correlations: The Role of the Components of Demographic Change," Working Papers 95-37, Duke University, Department of Economics.
  34. Palivos, Theodore & Yip, Chong K., 1993. "Optimal population size and endogenous growth," Economics Letters, Elsevier, vol. 41(1), pages 107-110.
  35. Charles I. Jones, . "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," Working Papers 99008, Stanford University, Department of Economics.
  36. Razin, Assaf & Yuen, Chi-Wa, 1995. "Utilitarian Tradeoff between Population Growth and Income Growth," Journal of Population Economics, Springer, vol. 8(1), pages 81-87, February.
  37. Easterly, William & Kraay, Aart, 2000. "Small States, Small Problems? Income, Growth, and Volatility in Small States," World Development, Elsevier, vol. 28(11), pages 2013-2027, November.
  38. Allen Kelley & Robert Schmidt, 1995. "Aggregate population and economic growth correlations: The role of the components of demographic change," Demography, Springer, vol. 32(4), pages 543-555, November.
  39. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  40. Raouf Boucekkine & Giorgio Fabbri, 2013. "Assessing Parfit’s Repugnant Conclusion within a canonical endogenous growth set-up," Journal of Population Economics, Springer, vol. 26(2), pages 751-767, April.
  41. Ehrlich, Isaac & Lui, Francis, 1997. "The problem of population and growth: A review of the literature from Malthus to contemporary models of endogenous population and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 205-242, January.
  42. Tamura, Robert, 2006. "Human capital and economic development," Journal of Development Economics, Elsevier, vol. 79(1), pages 26-72, February.
  43. Tamura, Robert, 2002. "Human capital and the switch from agriculture to industry," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 207-242, December.
  44. Palivos, Theodore, 1995. "Endogenous fertility, multiple growth paths, and economic convergence," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1489-1510, November.
  45. repec:ebl:ecbull:v:15:y:2007:i:8:p:1-7 is not listed on IDEAS
  46. Easterlin, Richard A, 1995. "Industrial Revolution and Mortality Revolution: Two of a Kind?," Journal of Evolutionary Economics, Springer, vol. 5(4), pages 393-408, December.
  47. Ronald Lee, 2003. "The Demographic Transition: Three Centuries of Fundamental Change," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 167-190, Fall.
  48. Momota, Akira, 2009. "A population-macroeconomic growth model for currently developing countries," Journal of Economic Dynamics and Control, Elsevier, vol. 33(2), pages 431-453, February.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Bucci, Alberto, 2013. "Returns to specialization, competition, population, and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(10), pages 2023-2040.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:2011039. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne DAVISTER-LOGIST).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.