Population, Poverty and Development: Review and Research Gaps

1. Population, Poverty and Development: Review and Research Gaps Aniceto C. Orbeta, Jr. Philippine Institute for Development Studies

2. Outline • Population and Development: A comparison of Philippines and Thailand • Population and Poverty • Philippine demographic trends • Philippine poverty alleviation record • Links • Evidence • Implications for Policy • Research Gaps

3. Population & Development: Philippines & Thailand - 1/2

4. Population & Development: Philippines & Thailand - 2/2

5. Population Size Structure Distribution Fertility Mortality Migration Production Production/ Employment Productive Capacity: • Natural Resources and Environment • Physical Capital • Human Resources Development Goods and Services Capabilities/ Well being • Longer life • To achieve desired fertility • Others Population and Sustainable Development Framework

6. Review of demographic developments • Slow fertility decline; slower than most countries in the region (Table 1) • Average performer in mortality (Table 2) • Continued high population growth; higher than most countries in the region • Implications: • Expect extended years of high youth dependency • “Demographic onus” rather than “demographic bonus” like East Asia Countries

7. Fertility and Mortality in Selected ASEAN Countries

8. Review of poverty alleviation record • Modest gains from 44.2% in 1985 to 33.7% in 2000 or about 0.7 annually • Number of poor people increased from 4.6 million in 1985 to 5.14 million in 2000 • Gains are only clear in urban areas (declined by 14 compared to only 4 percentage points in rural areas between 1985-2000) • Inequality has not improved: • Share of poorest quintile: 4.8% (1985) – 4.7% (2000) • Share of richest quintile: 51.2% (1985) – 54.8% (2000) • Gini coefficient: 0.47 (1985) – 0.51 (2000)

9. Poverty and Inequality, 1985-2000

10. Family Size and Poverty • An empirical regularity that poverty incidence is higher the larger the family size

11. Population and poverty links • Growth Channel (Size of the Pie): Does demographic change (change in population growth, fertility, mortality, age structure, etc.) affectschanges in the level and growth of average attainable well-being per person? • Distribution Channel (Sharing of the Pie): Does demographic change affects the distribution of income given attainable well-being per person? • Conversion Channel (“Enjoyment” from Share of the Pie): Does demographic change affects the conversion of attainable well-being per person into actual well-being per person?

12. Evidence on the growth channel (Size of the pie) • Demographic changes (decline in population growth, fertility, mortality and changing age distribution) have sizeable impacts on economic growth; account for about half of recorded economic growth in Southeast Asia, one third in East Asia • Fertility and mortality effects are offsetting; mortality decline stimulates growth, rise in fertility attenuates growth; this is the primary reason for the limited effect in earlier analysis that focus on population growth • In the Philippines, decomposition analysis show that economic growth contributes bigger proportion in reduction of poverty; in cross-country analysis it contributes about one half

13. Evidence on the distribution channel (Sharing of the pie) • High fertility skews the distribution of income against the poor in cross-country analysis; in the Philippines, there is still no direct evidence but indications are pointing to the same direction given the limited employment opportunities generated and the rapidly growing labor force • The dilution effect appears to be not very strong • On the acquisition effect, there are mixed results on the impact of an additional child on labor force participation of fathers but this leads to a decline of mother’s labor time and an increase in her home time

14. Evidence on the conversion channel (“Enjoyment” from share of the pie) • Doubts on whether poor families can freely choose their family size given poorer access to FP services, particularly for the Philippines • There are evidence on both sides of the economies of scale argument • Clear deleterious effects of large family on investments in human capital • Clear increase in vulnerability with larger family size

15. Family planning practice by socioeconomic class

16. Population Growth and Human Capital Accumulation – Household Level – 1/2 Survey of developing country evidence • King (1987) • Children in large families perform less well in school • Children in large families have poorer health, lower survival probabilities, and are less developed physically • Lloyd (1994) • Resource dilution with each child getting smaller share of family resources including income, time and maternal nutrition • Diminished access to public resources, such as health and education • Unequal distribution of resources among siblings

17. Population Growth and Human Capital Accumulation – Household Level – 2/2 • Evidence from Philippine data • High fertility negatively affects school participation of older children (13-17 years old) although it does not affect school participation of younger children (7-12 years old) (Herrin 1983, Bauer and Racelis, 1992) • Large negative impact on boys (DeGraff et al., 1993) • Expenditure per child is also negatively affected (Bankosta and Evenson, 1978)

18. Family Size and Vulnerability • Using the 1997 FIES and the 1998 and 1999 APIS, it was found that 46% of the family remained to be non-poor (N) while 22% remained to be poor (P) throughout the period. Interestingly, as one goes from households who remained to be poor to households who remained to be non-poor, the family size declines (Reyes, 2002).

19. Implications for policy – 1/2 • Demographics play an important role in poverty alleviation; better control of fertility should be an important component of poverty alleviation • While there maybe reasons why the poor have large families, it will be difficult, particularly for the Philippines, to sort which ones are due to lack of control over fertility and which ones are due to preferences; better control of fertility is needed to clarify this • There are intergenerational impact of current fertility choices primarily via lower investments in human capital– this is the main avenue of intergenerational transmission of poverty; need for pro-active subsidy and better targeting of public services, e.g. education and health, which are in themselves investments with high social returns apart from indirect returns through demographic changes

20. Implications for policy 2/2 • Importance of consistent economic growth well-established; still the primary strategy of development for the Philippines; a conducive economic environment is needed to translate potential benefits from demographic changes • With globalization, lower fertility is needed to benefit from opportunities at the aggregate and household levels, and to lessen the vulnerability of households to economic shocks • The question to ask: Is there enough reasons for government to intervene in fertility decisions?; for poor households, should the “with persuasion” case in Herrin (2002) be pursued?

21. Research Agenda – Population, Poverty and Development • Improve upon the current broad brush attribution of the interaction between population and poverty for the Philippines. There is a need to continue to clarify the interactions, at the macro, community and household levels in the Philippine context. The objective is to find more effective policy handles • Poverty, fertility management and preferences and its implications at the household level