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Economic Growth and the Demographic Transition


  • David E. Bloom
  • David Canning
  • Jaypee Sevilla


For decades, economists and social thinkers have debated the influence of population change on economic growth. Three alternative positions define this debate: that population growth restricts, promotes, or is independent of economic growth. Proponents of each explanation can find evidence to support their cases. All of these explanations, however, focus on population size and growth. In recent years, however, the debate has under-emphasized a critical issue, the age structure of the population (that is, the way in which the population is distributed across different age groups), which can change dramatically as the population grows. Because people's economic behavior varies at different stages of life, changes in a country's age structure can have significant effects on its economic performance. Nations with a high proportion of children are likely to devote a high proportion of resources to their care, which tends to depress the pace of economic growth. By contrast, if most of a nation's population falls within the working ages, the added productivity of this group can produce a 'demographic dividend' of economic growth, assuming that policies to take advantage of this are in place. In fact, the combined effect of this large working-age population and health, family, labor, financial, and human capital policies can create virtuous cycles of wealth creation. And if a large proportion of a nation's population consists of the elderly, the effects can be similar to those of a very young population. A large share of resources is needed by a relatively less productive segment of the population, which likewise can inhibit economic growth. After tracing the history of theories of the effects of population growth, this report reviews evidence on the relevance of changes in age structure for economic growth. It also examines the relationship between population change and economic development in particular regions of the world: East Asia; Japan; OECD, North America and Western Europe; South-central and Southeast Asia; Latin America; Middle East and North Africa; Sub-Saharan Africa; and Eastern Europe and the former Soviet Union. Finally, it discusses the key policy variables that, combined with reduced fertility and increases in the working-age population, have contributed to economic growth in some areas of the developing world.

Suggested Citation

  • David E. Bloom & David Canning & Jaypee Sevilla, 2001. "Economic Growth and the Demographic Transition," NBER Working Papers 8685, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8685
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    1. David E. Bloom & David Canning & Pia N. Malaney, 1999. "Demographic Change and Economic Growth in Asia," CID Working Papers 15, Center for International Development at Harvard University.
    2. Simon Kuznets, 1960. "Population Change and Aggregate Output," NBER Chapters,in: Demographic and Economic Change in Developed Countries, pages 324-351 National Bureau of Economic Research, Inc.
    3. Gene M. Grossman (ed.), 1996. "Economic Growth," Books, Edward Elgar Publishing, volume 0, number 553.
    4. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1, April.
    5. Ricardo Paes de Barros & Sergio Firpo & Roberta Guedes & Phillippe Leite, 2015. "Demographic Changes and Poverty in Brazil," Discussion Papers 0096, Instituto de Pesquisa Econômica Aplicada - IPEA.
    6. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," World Bank Economic Review, World Bank Group, vol. 12(3), pages 419-455, September.
    7. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
    8. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    9. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "The Effect of Health on Economic Growth: Theory and Evidence," NBER Working Papers 8587, National Bureau of Economic Research, Inc.
    10. David E. BLOOM & Jocelyn E. FINLAY, 2009. "Demographic Change and Economic Growth in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 45-64.
    11. Lindh, Thomas & Malmberg, Bo, 1998. "Age structure and inflation - a Wicksellian interpretation of the OECD data," Journal of Economic Behavior & Organization, Elsevier, vol. 36(1), pages 19-37, July.
    12. Lindh, Thomas & Malmberg, Bo, 1999. "Age Distributions and the Current Account -A Changing Relation?," Working Paper Series 1999:21, Uppsala University, Department of Economics.
    13. 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.
    14. Katherin Ross Phillips & Paul Gertler & Timothy M. Smeeding & Orazio P. Attanasio & Manfred Zeller & Hugo A. Hopenhayn & Estelle James & José-Victor Ríos-Rull & Steen Lau Jørgensen & Nora Lustig & Eli, 2001. "Shielding the Poor: Social Protection in the Developing World," IDB Publications (Books), Inter-American Development Bank, number 50878 edited by Nora Lustig, February.
    15. Robert W. Fogel, 1994. "The Relevance of Malthus for the Study of Mortality Today: Long-Run Influences on Health, Mortality, Labor Force Participation, and Population Growth," NBER Historical Working Papers 0054, National Bureau of Economic Research, Inc.
    16. Lindh, Thomas & Malmberg, Bo, 2000. "Can age structure forecast inflation trends?," Journal of Economics and Business, Elsevier, vol. 52(1-2), pages 31-49.
    17. Samuelson, Paul A, 1975. "The Optimum Growth Rate for Population," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 531-538, October.
    18. David E. Bloom & David Canning, 2004. "The Health and Wealth of Africa," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 5(2), pages 57-81, April.
    19. David Bloom & David Canning, 2003. "The Health and Poverty of Nations: From theory to practice," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 4(1), pages 47-71.
    20. repec:idb:brikps:50878 is not listed on IDEAS
    21. 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.
    22. Gary S. Becker, 1960. "An Economic Analysis of Fertility," NBER Chapters,in: Demographic and Economic Change in Developed Countries, pages 209-240 National Bureau of Economic Research, Inc.
    23. Bloom, David & Craig, Patricia & Malaney, Pia N., 2001. "The Quality of Life in Rural Asia," OUP Catalogue, Oxford University Press, number 9780195924541.
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