IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Trading Population for Productivity

Listed author(s):
  • Oded Galor

    (Brown University & Hebrew University)

  • Andrew Mountford

    (Royal Holloway)

This research argues that the rapid expansion of international trade in the second phase of the industrial revolution has played a significant role in the timing of demographic transitions across countries and has thereby been a major determinant of the distribution of world population and a prime cause of the Great Divergence in income per capita across countries in the last two centuries. The theory suggests that international trade affected the evolution of economies asymmetrically. The gains from trade were channeled towards population growth in non- industrial nations while in the industrial nations they were directed towards investment in education and growth in output per capita. International trade enhanced the specialization of industrial economies in the production of skilled intensive goods. The rise in the demand for skilled labor induced an investment in the quality of the population, expediting the demographic transition, stimulating technological progress and further enhancing the comparative advantage of these industrial economies in the production of skilled intensive goods. In non-industrial economies, in contrast, the specialization in the production of unskilled intensive goods that was brought about by international trade reduced the demand for skilled labor and provided limited incentives to invest in population quality. The gains from trade were utilized primarily for an increase in the size of the population. The demographic transition was therefore delayed, increasing further the abundance of unskilled labor in these economies and enhancing their comparative disadvantage in the production of skilled intensive goods. The focus on the interaction between population growth and comparative advantage generates an important new insight regarding the distribution of the gains from trade. The theory suggests that even if trade equalizes output growth of the trading countries, (due to the terms of trade effect), income per capita of developed and less developed economies will diverge since in less developed economies growth of total output will be generated primarily by population growth, whereas in developed economies it will be generated by an increase in output per capita.

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://econwpa.repec.org/eps/ge/papers/0410/0410001.pdf
Download Restriction: no

Paper provided by EconWPA in its series GE, Growth, Math methods with number 0410001.

as
in new window

Length: 43 pages
Date of creation: 04 Oct 2004
Handle: RePEc:wpa:wuwpge:0410001
Note: Type of Document - pdf; pages: 43
Contact details of provider: Web page: http://econwpa.repec.org

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. Kogel, Tomas & Prskawetz, Alexia, 2001. "Agricultural Productivity Growth and Escape from the Malthusian Trap," Journal of Economic Growth, Springer, vol. 6(4), pages 337-357, December.
  2. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
  3. Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592.
  4. Daron Acemoglu & Jaume Ventura, 2001. "The World Income Distribution," NBER Working Papers 8083, National Bureau of Economic Research, Inc.
  5. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," NBER Working Papers 5098, National Bureau of Economic Research, Inc.
  6. Antoni Estevadeordal & Alan M. Taylor, 2002. "A Century of Missing Trade?," American Economic Review, American Economic Association, vol. 92(1), pages 383-393, March.
  7. Galor, Oded & Weil, David, 1999. "From Malthusian Stagnation to Modern Growth," CEPR Discussion Papers 2082, C.E.P.R. Discussion Papers.
  8. Peter Howitt & David Mayer-Foulkes, 2002. "R&D, Implementation and Stagnation: A Schumpeterian Theory of Convergence Clubs," NBER Working Papers 9104, National Bureau of Economic Research, Inc.
  9. Galor, Oded & Weil, David, 1998. "Population, Technology and Growth: From the Malthusian Regime to the Demographic Transition," CEPR Discussion Papers 1981, C.E.P.R. Discussion Papers.
  10. Baldwin, Richard E & Martin, Philippe & Ottaviano, Gianmarco I P, 2001. "Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs," Journal of Economic Growth, Springer, vol. 6(1), pages 5-37, March.
  11. Oded Galor & Omer Moav, 2002. "Natural Selection and the Origin of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1133-1191.
  12. Nils-Petter Lagerloef, 2000. "From Malthus to Modern Growth: The Three Regimes Revisited," Econometric Society World Congress 2000 Contributed Papers 1248, Econometric Society.
  13. Acemoglu, D. & Zilibotti, F., 1998. "Productivity Differences," Papers 660, Stockholm - International Economic Studies.
  14. Mark Doms & Timothy Dunne & Kenneth R. Troske, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 253-290.
  15. Findlay, Ronald & Kierzkowski, Henryk, 1983. "International Trade and Human Capital: A Simple General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 957-978, December.
  16. Daron Acemoglu & Simon Johnson & James Robinson, 2002. "The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth," NBER Working Papers 9378, National Bureau of Economic Research, Inc.
  17. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1.
  18. David N. Weil, 1996. "Appropriate Technology and Growth," Working Papers 96-24, Brown University, Department of Economics.
  19. Easterlin, Richard A., 1981. "Why Isn't the Whole World Developed?," The Journal of Economic History, Cambridge University Press, vol. 41(01), pages 1-17, March.
  20. Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  21. Goodfriend, Marvin & McDermott, John, 1995. "Early Development," American Economic Review, American Economic Association, vol. 85(1), pages 116-133, March.
  22. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
  23. Oded Galor & David N. Weil, 1998. "Population, Technology, and Growth: From the Malthusian Stagnation to the Demographic Transition and Beyond," Working Papers 98-3, Brown University, Department of Economics, revised 19 Aug 1998.
  24. Findlay, Ronald, 1996. "Modeling Global Interdependence: Centers, Peripheries, and Frontiers," American Economic Review, American Economic Association, vol. 86(2), pages 47-51, May.
  25. repec:rus:hseeco:72151 is not listed on IDEAS
  26. N. Chaudhuri, 1966. "India's Foreign Trade and the Cessation of the East India Company's Trading Activities, 1828–40," Economic History Review, Economic History Society, vol. 19(2), pages 345-363, 08.
  27. Clark, Gregory, 1987. "Why Isn't the Whole World Developed? Lessons from the Cotton Mills," The Journal of Economic History, Cambridge University Press, vol. 47(01), pages 141-173, March.
  28. Francesco Caselli & Wilbur John Coleman II, 2001. "The U.S. Structural Transformation and Regional Convergence: A Reinterpretation," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 584-616, June.
  29. repec:hhs:iuiwop:430 is not listed on IDEAS
  30. Matthias Doepke, 2001. "Accounting for Fertility Decline During the Transition to Growth," UCLA Economics Working Papers 804, UCLA Department of Economics.
  31. Goldin, Claudia D. & Katz, Lawrence F., 1998. "The Origins of Technology-Skill Complementarity," Scholarly Articles 27867130, Harvard University Department of Economics.
  32. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," NBER Working Papers 8460, National Bureau of Economic Research, Inc.
  33. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  34. Alan M. Taylor, 1996. "Sources of Convergence in the Late Nineteenth Century," NBER Working Papers 5806, National Bureau of Economic Research, Inc.
  35. Joseph Zeira, 1998. "Workers, Machines, and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1091-1117.
  36. McDermott, John, 2002. "Development Dynamics: Economic Integration and the Demographic Transition," Journal of Economic Growth, Springer, vol. 7(4), pages 371-409, December.
  37. Lawrence F. Katz & Claudia Goldin, 2001. "The Legacy of U.S. Educational Leadership: Notes on Distribution and Economic Growth in the 20th Century," American Economic Review, American Economic Association, vol. 91(2), pages 18-23, May.
  38. O'Rourke, Kevin H & Taylor, Alan M & Williamson, Jeffrey G, 1996. "Factor Price Convergence in the Late Nineteenth Century," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 499-530, August.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpge:0410001. 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: (EconWPA)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.