Sunday, February 3, 2013

Baby bust?

Here is an interesting piece from Jonathan Last at the WSJ. He discusses the problems that may be associated with declining fertility rates in the U.S.  We're going to talk about the relationship between population and economic growth and development in class later in the semester, and this article provides some interesting previews.  The author's premise is that declining fertility rates result in economic problems. He argues that a more sustainable level of human capital (e.g. fertility near the "replacement rate") will make these problems more manageable. The article is a mix of facts, empirical evidence, opinion and conjecture, so be sure to think carefully about what you're reading.

For the purposes of our course, I hope it's clear that causality flows in both directions here. The result appears to be a negative feedback loop (i.e. an action sets in motion a reaction that at least partially offsets the original action).  So I have to wonder if we're simply oscillating toward an equilibrium, rather than starting a new trend toward steady decline.

1. Economic growth may lead to slower population growth.
What evidence do we have in support of this?
What are the reasons here?  J. Last pins "universal" college education as the starting point - but where does that come from?

2. Slower population growth, in turn, may temper economic growth.
Again, consider the reasons for this. Could slow population growth foster economic growth?

3. If 2 is true, should this hit to economic growth then cause a slight uptick in population growth?
...and on, and on until we approach a steady state?

Last uses Japan to illustrate potential problems that arise from slowing fertility rates. He then discusses the importance of immigration in terms of "outsourcing fertility".
Here is a related article at CNN Money. Hatip: CM.

He then goes off on the price of college and then land rents and infrastructure. I'm not sure I follow all of List's logic, but I'd like to hear your thoughts.  Comments are welcome regarding any of these issues, but let's do our best to keep politics and opinion out of it.  As always, data (e.g Gapminder, nationmaster) and links to more reading are encouraged.

extra: Who are Esther Boserups and Julian Simon?


  1. Some reasons for the decline of population growth, increase in schooling and empowerment of women, are reasons for economic growth. Even though less people are being added to the work force, each individual in the work force is becoming more valuable. Because people are having less children, they have more time and effort to put into the work force, making it more efficient.

    Having a rate of population growth below the replacement rate means that there will eventually be a shortage of labor to the work force. When this shortage occurs, wages will increase and there will be more economic benefit for working. With higher incomes, families may choose to have more children, thus raising the birth rate again.

    It might be too soon to tell, but the current recession may force the growth rate even lower until the higher wages begin to make child bearing less of a financial burden.

    I agree somewhat with Simon in that human innovation will make up for the depletion of some resources (solar power will one day replace oil or gas), but I think that there are some resources (fresh water, clean air) that development in technology or increase in wealth will not replace.

    As for Boserup, I can definitely see the logic in her argument that agricultural methods are determined by population, but think about all the food in the US that is wasted. We produce more food than our population really needs. I think that GNOs are a method of increasing agricultural efficiency, however, GNOs are mainly manufactured to save costs from wasted crops, not to feed hungry people due to a shortage of food. I don't believe population has as great of an influence on agricultural production of some crops, such as corn, as the other products the crops can be used for.

  2. I understand the argument that immigration helps combat the issue of being below the replacement rate but I find issues with that. What's the difference between good immigration and bad immigration?

    There is a large portion of immigrants that fall below the poverty line or float right above it.

    "...breakdown of foreign-born individuals into the categories of naturalized citizen and non-citizens. Only 9.4% of naturalized citizens fall below 100% of the poverty line compared to 20.1% of non-citizens. In addition, 73% of naturalized citizens are above the 200% poverty line compared to 51% of non-citizens."

    Considering that, we have a large portion of immigrants that aren't contributing to reducing the effects of being below the replacement rate. According to Last, population growth and increased innovation are correlated. So, I suppose we should invest more in educating these immigrants to quickly adapt to American professional life through certain intensive programs. This will hopefully increase or immigration back to the levels of old.