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Asian Demographic Transition: An Instrumental-Variables Panel Approach

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  • Yongil Jeon
  • Sang-Young Rhyu
  • Michael P. Shields

Abstract

We examine patterns in fertility during the demographic transition using a panel data set across 25 Asian countries for 1975-2003. The adult female literacy rate is used as an instrumental variable for the endogenous female labor force participation rate, which has been unsolved in the population literature. The preliminary panel data analysis suggests that relative cohort size is significant in explaining the decline in fertility before controlling for simultaneity bias. This result, however, may be spurious. After considering the instrumental variables estimation in the panel data structure, the age structure variable no longer plays a dominant role in explaining declining fertility rates in many Asian countries. Systematic differences were found between East and South Asia. A policy implication in South Asia is that development may reduce fertility directly through increasing income rather than indirectly through a change in female labor force participation or urbanization. In East Asia, the indirect effects dominate.

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Bibliographic Info

Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 28-07.

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Length: 26 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:mos:moswps:2007-28

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Keywords: Fertility; Easterlin hypothesis; Transition Economies; Relative Cohort Size; Age Structure;

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  1. John C. Caldwell, 1996. "A New Look at the Asian Fertility Transition," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 385-398.
  2. Diane J. Macunovich, 1998. "Fertility and the Easterlin hypothesis: An assessment of the literature," Journal of Population Economics, Springer, vol. 11(1), pages 53-111.
  3. Diane Macunovich, 1999. "Relative Cohort Size: Source of a Unifying Theory of Global Fertility Transition," Center for Policy Research Working Papers 8, Center for Policy Research, Maxwell School, Syracuse University.
  4. Yongil Jeon & Michael P. Shields, 2005. "The Easterlin hypothesis in the recent experience of higher-income OECD countries: A panel-data approach," Journal of Population Economics, Springer, vol. 18(1), pages 1-13, 08.
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