Four Phases in the demographic transition. Implications for economic and social development

Traditionally, the demographic transition model has focused primarily on long-term changes in mortality rates, fertility rates and population growth rates. Of equal, or perhaps even greater, importance is however the transformation of the age structure that the transition engenders. In this paper we focus on this age transition and argue that (1) The age transition is a more extended process than the mortality and fertility transition. It starts simultaneously with the mortality decline and continues almost one hundred years after a stabilization of the birth rates. (2) During the age transition population growth will be concentrated in turn to the youngest age groups, the young adult group, the middle age group and the old age group. (3) During these different phases of the age transition, the social and economic effects of population growth will be different. Poverty, child labor and low savings rates characterize the phase child abundance. The second phase, when young adults predominate, is characterized by high rates of migration, urbanization and proletarization, and by early industrialization and institutional transformation. In the third phase, when the number of middle aged increase, the economy is characterized by high savings rates and large increases in per capita income. The old age phase, finally is characterized by an increasing dependency burden, declining savings rates, inflationary pressures, an expanding public sector, and stagnating economic growth. The paper argues that these patterns may be explained by the shifts in economic behavior that take place during the life cycle. Recent studies of age structure effects on macro-economic variables are referred. The argument is illustrated with historical examples from Sweden, England, and Western Europe, along with modern examples from Asia, Africa and Latin-America.