Abstract: Several considerations are presented in support of the hypothesis that a fertility decline can facilitate the achievement of some of the macroeconomic objectives of government. Given that there is about a 15 year lag time between the birth of a child and his or her participation in the labor force the immediate effect of additional births all other things being equal is to depress the per capita gross national product (GNP). Even when these additional births have already entered the labor force GNP per capita will remain relatively lower because of the so called law of diminishing marginal returns. Given a state of technology to increase labor productivity defined as GNP per worker capital deepening (increasing capital per worker) is important. Fertility decline is expected to facilitate capital deepening for the following reasons: the saving rate tends to be higher when income per capita is higher; given the low level of mortality at present a decline in the birthrate will mean a lower dependency rate; and human capital formation in terms of higher education better training and so forth. Efforts to reduce poverty will be facilitated with a reduction of fertility. Most families depend on labor earnings as the income source. To reduce poverty it is important for the real wage rate to rise over time and the wage rate will tend to rise when the ex-ante labor demand grows faster than ex-ante labor supply. In the long run a fertility decline will tend to slow down the growth of the labor supply. 2 factors found to be important determinants of rural poverty are farm size and agricultural productivity. A significant positive correlation was found between average household size and the rate of urban poverty incidence across provinces in the Philippines. Many types of public expenditures need to be increased as the population increases. Simulation of the impact of public investment in population control suggests that returns in terms of increase in per capita income are likely to be substantial. The following are arguments against the thesis that rapid population growth is a drag on economic development: the economy can benefit from economies of scale due to a larger population; and population growth stimulates technological progress and investment. The reasons for the latter are the following: abundance of cheap labor supply increases the absolute amount of capital in the economy; aggregate demand will increase with population growth thereby raising profitability and inventive and innovative activities; inventive and innovative activity is likely to be enhanced through the challenge and response mechanism; and population growth increases the supply of inventors and innovators.
Publication Year: 1982
Publication Date: 1982-01-01
Language: en
Type: article
Indexed In: ['pubmed']
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot