Population and Economic Growth Malthus and the Phantom Menace

Population and Economic Growth Malthus and the Phantom Menace 2024 1 A Malthusian model • Robert Malthus, An Essay on the Principle of Population, 1798. • Simple yet powerful model of the relation between population and economic growth. • Good description of the evidence of humanity until around 1800. • Good description of the natural economy of animals. • Indeed, Malthus had a strong influence on Darwin. 2 Growth facts in the very long run • For most of human history, income per capita growth was glacially slow. • Before 1500, there was little or no economic growth. There was some growth between 1500 to 1800 in Europe. • Around 1800, the average world income was roughly as high as in the Neolithic. 1. Income was higher in England or the Netherlands. 2. But it was probably lower in China or India. • Moreover: 1. Hours of work were much longer in the 1800s than in the Neolithic. 2. There was much more inequality in the 1800s than in the Neolithic. 3 Some evidence • Paul Bairoch, Economics and World History: Myths and Paradoxes: 1. Living standards were roughly equivalent in Rome (1st century CE), Arab Caliphates (10th century CE), China (11th century CE), India (17th century CE), Western Europe (early 18th century CE). 2. Cross-sectional differences in income were a factor of 1.5 or 2. • Angus Maddison, The World Economy: A Millennial Perspective calculates 1500-1820 growth rates: 1. World GDP per capita: 0.05%. 2. Europe GDP per capita: 0.14%. • After 1820: great divergence in income per capita. 4 Heights from skeletal remains Period Mesolithic Neolithic 2500 BCE 1700 BCE 1600-1800 1700-1800 1700-1850 Location Europe Europe Turkey Greece Holland Norway London Height, cm. 168 167 166 166 167 165 170 5 Laborer’s wages in wheat equivalent Ancient Babylonia Assyria Neo-Babylonia Classical Athens Roman Egypt England 1800-1600 BC 1500-1350 BC 900-400 BC 408 BC c AD 250 1780-1800 15 10 9 30 8 13 6 The index for day each commodity overall is set to 100 for 1860–9. Real Note: agricultural wages,and England, 1209-1869 160 Building labourers 120 100 80 60 Farm labourers 40 20 18 00 17 00 16 00 15 00 14 00 13 00 0 12 00 Real wage (1860s = 100) 140 7 Composition workingHans-Joachim class expenditure, 1788-1792 282 Voth Clothing Drink 6% Fuel and light Sugar, treacle Tea, coffee 12% Dairy 13% Meat 5% Potatoes 13% Oatmeal 27% Wheat flour 20% Bread 10% 5% Rent 7% 3% 10% 69% Food Food 8 World income and population • Before the 1800s, the world is in the Malthusian trap: improvements in technology only translate in increases in world population. • In the 1800s the western world moved away from the trap: demographic transition. • In the 1900s, much of the rest of the world went through similar process. • Countries in Africa and the Middle East still lag. • We want to understand the Malthusian trap and the demographic transition. 9 World income and population: data Year -5000 -1000 1 1000 1500 1800 1900 1950 2000 2015 Population (m.) 5 50 170 265 425 900 1625 2515 6120 7300 GDP per capita ($) 205 240 210 250 260 375 1275 3050 12262 15000 10 The demographic transition 11 The demographic transition: UK Figure 1: Demographic trends, Great Britain/UK CBR 60 CDR Figure 2: De CBR slope: -0.36 CDR slope: -0.12 60 50 40 rate per 1000 rate per 1000 50 1880 30 1810 1873 40 30 1869 20 20 1938 10 10 1951 0 0 1750 1800 1850 1900 year 1950 2000 1860 1880 1 12 The demographic transition: Japan Figure 9: Demographic trends, Japan CBR 60 CDR CBR slope: -0.37 CDR slope: -1.80 rate per 1000 50 40 1935 30 20 1945 1993 10 1952 0 1880 1900 1920 1940 year 1960 1980 2000 2020 13 The demographic transition: Argentina eat Britain/UK Figure 2: Demographic trends, Argentina CBR slope: -0.36 CDR slope: -0.12 CBR 60 rate per 1000 50 CDR CBR slope: -0.31 CDR slope: -0.30 1873 40 30 1869 1958 20 1938 10 1951 1945 0 1950 2000 1860 1880 1900 1920 1940 year 1960 1980 2000 2020 14 The demographic transition: Chile Figure 8: Demographic trends, Chile ds, Mauritius CBR slope: -0.50 CDR slope: -0.76 CBR 60 CBR slope: -0.30 CDR slope: -0.39 CDR 50 rate per 1000 R 8 1930 40 30 1921 20 10 1979 1980 2000 2020 0 1840 1860 1880 1900 1920 1940 year 1960 1980 2000 2020 15 The demographic transition: Average births Crude birth rate versus log GDP per capita 10 trans. curve, R 2 = 0.559 trans. curve implied 3-phase transition 70 quad. poly., R 2 = 0.551 quart. poly., R2 = 0.562 births per 1000 population 60 (6.49,47.5) 50 40 30 20 10 (9.66,10.8) 0 11 12 5 6 7 8 9 log GDP per capita 10 11 12 16 Thedeath demographic transition: deaths Crude rate versus log GDPAverage per capita 10 45 trans. curve, R 2 = 0.358 trans. curve implied 3-phase transition quad. poly., R 2 = 0.334 quart. poly., R2 = 0.352 40 deaths per 1000 population 35 30 25 (7.09,19.5) 20 15 10 (8.45,8.6) 5 0 11 12 5 6 7 8 9 log GDP per capita 10 11 12 17 The world, I 18 The world, II 19 20 21 22 23 Basic malthusian model Figure 1: Insert Title Here Fertility Mortality 1 Population y ∗ Income Land per Capita y ∗ Income 24 Comparative statics 1 • Let us suppose that in a Malthusian world, we have two countries, the first one with better health conditions (i.e., better medical system, vaccines, or better sanitation). • The first country will have a lower mortality line. • From our previous analysis: 1. Income per capita will be lower in the first country. 2. Population density will be higher. 25 Comparative statics 1 Figure 2: Improved Sanitation (Lower Mortality Rates) Fertility Mortality 2 Population y′ y∗ Mortality’ Income P′ P∗ Land per Capita y′ y∗ Income 26 Historical example • Preindustrial Europe was particularly filthy, especially in comparison with Japan. • Simultaneously, Japan was poorer and had a higher population density. • Evidence: 1. The cleanliness of the Japanese was emphasized by European travelers between 1543 and 1811. 2. Toilets in Japan were built at some distance from living quarters; in England, even the upper classes built their toilets adjacent to the bedrooms. 3. Houses in Japan had raised wooden floors and outside shoes were taken off at the entrance. In England, the dwelling had beaten earth floors covered by rushers that were only infrequently renewed. 4. In the 1710s, English per capita soap consumption was less than 0.2 ounces per day. Convicts transported to Australia around 1850 got a ration of 0.5 ounces per day. 27 Comparative statics 2 • Let us suppose that in a Malthusian world, we have two countries, the first one where women marry late (perhaps because of religious reasons) and one where women marry early. • The first country will have a lower fertility line. • From our previous analysis: 1. Income per capita will be higher in the first country. 2. Population density will be lower. 28 Comparative statics 2 Figure 3: Preference Changes (Lower Fertility Rates) Fertility Fertility’ Mortality 3 Population y ∗ y ′ Income P∗ P′ Land per Capita y∗ y′ Income 29 Historical example • Hajnal line between Saint Petersburg to Trieste. • European Marriage pattern: 1. High marriage age of women (around 25-26). 2. A substantial proportion of women remained celibate (around 25%). • It appears in the later Middle Ages. • Why? • Alternative mechanisms for fertility control: abortion, infanticide, extended lactancy. 30 Hajnal line 31 Comparative statics 3 • Let us suppose that in a Malthusian world, we have two countries, the first one with higher productivity than the second. • From our previous analysis: 1. Income per capita will be the same in both countries. 2. Population density will be higher in the first country. 32 Comparative statics 3 Figure 1: Technological Improvement Fertility Mortality 1 Population y ∗ Income P′ P∗ Land per Capita’ Land per Capita y∗ Income 33 Historical example • Historical Example: China versus Europe. 1. Rice delivers more units of calories per unit of land than wheat: productivityrice >productivitywheat . 18th century, one hectare produced 7.5 million calories if Rice, 1.5 if wheat, 0.34 if meat. 2. Hence, income per capita will be roughly the same, but China will be denser. • Cultivation of different cereals may have many important consequences for economic growth and social organization (Wittfogel, Hydraulic Despotism). 34 Comparative statics 4 • Let us suppose that in a Malthusian world, we have two countries, the first with an Emperor that taxes τ of agricultural production to finance his private consumption, for example, a grand palace. • We have that the after-tax income is then ye = (1 − τ ) y . • With this new technology level, the analysis goes through unchanged with respect to the previous case: 1. Income per capita will be the same in both countries. 2. Population density will be lower in the first country. 35 Political economy consequences • Hence, the cost of the palace is less population, not a lower income for the existing population. • Similarly, having a landed gentry obtaining a huge rent from farmers only implies a lower population, not higher income: 1. Elites may live much better if productivity increases (and hence taxes), even if the average person does not improve. 2. Strong limit to the effects of redistribution. • Historical example: land reform in France during the revolution. 36 Dynamics of the model I The waves of population “What has changed entirely is the rhythm of the population increase. At present it registers a continuous rise, more or less rapid according to society and economy but always continuous. Previously it rose and then fell like a series of tides. This alternate demographic ebb and flow characterised life in former times, which was a succession of downward and upward movements, the first almost but not completely cancelling out the second. These basic facts make almost everything else seem secondary.” Fernand Braudel, Civilization and Capitalism, 15th-18th Century: The structure of everyday life, p. 30. 37 Dynamics of the model II • Population grows when density is low and income per capita is high. • Let us suppose we are at the steady state and that an epidemic wipes out 50 percent of the population: 1. Income per capita will immediately rise by. 2. Population will begin to increase (lower mortality and higher fertility). 3. Eventually, we will end up in the same steady state as before. • Historical example: Black Death in Europe in 1348. • Robert Brenner’s view: economic transformation in Europe. 38 Spread of the black death, 1346-1353 39 The index for each overall is set to 100 for 1860–9. RealNote: agricultural daycommodity wages,andEngland, 1209-1869 160 Building labourers 120 100 80 60 Farm labourers 40 20 18 00 17 00 16 00 15 00 14 00 13 00 0 12 00 Real wage (1860s = 100) 140 40 Mechanisms for change • Farming vs. manufacturing/services economy. • Child labor. • Survival rates. • Modern financial markets and social security. • Quantity-quality trade-off. • Contraceptive technologies. • Cultural norms (including gender roles). 41 Table 1. Differences between individuals who are affected and unaffected by the refor Italy’s pension reform 1 year-window around the reforms’ thresholds. Number of children (up to 1993) Unaffected Affected (up to - 1 year) (up to +1 year) 1.3831 1.3788 (0.0742) (0.0802) Number of children (after 1993) 0.3134 (0.0421) 0.4899*** (0.0468) Number of children (up to 1996) 1.4627 (0.0730) 1.5101 (0.0800) Number of children (after 1996) 0.2338 (0.0360) 0.3586** (0.0410) Total number of children (up to 2006) 1.6965 (0.0699) 1.8687* (0.0772) 201 198 N 42 Expansion of Rede Globo 12 American Economic Journal: applied economics october 2012 Decade first reached by signal [1990–2000] [1980–1990] [1970–1980] 0 1.5 3 6 9 Decimal Degrees 12 43 Fertility drop American Economic Journal: applied economics october 2012 0.015 0.01 0.005 0 −0.005 −0.01 −9 −8 −7 −6 −5 −4 −3 −2 −1 0 1 2 3 4 5 6 7 8 9 Years since coverage Figure 4. Timing of Fertility Decline around Year of Globo Entry e: Estimated coefficients and 95 percent confidence interval from a regression of the probability of giving birth 44 a set of dummies from t − 9 to t + 9, where t = 0 is the year of Globo entry.