120 likes | 283 Views
NS4053 Winter Term 2014 Population/Demographics. Population I. “Population Debate Will Gain Prominence,” Oxford Analytica, October 25, 2011 Debate about how many people are too many has a long history
E N D
Population I • “Population Debate Will Gain Prominence,” Oxford Analytica, October 25, 2011 • Debate about how many people are too many has a long history • Confidence in humankind’s ability to feed and cloth itself has risen and fallen over the centuries • Work of Thomas Malthus (1766-1834) has been associated with a pessimistic view of growing populations • His main worry was with the food supply but areas of concern have expanded since to include: • Water, • Mineral and energy resources, as well as • Environmental issues including effect of population on greenhouse gas emissions and hence world’s climate.
Population II • Pessimistic View • Neo-Malthusians stress that many improvements the world has experienced have been due to increased use of: • Fossil fuels and • Nitrogen-based fertilizers • Problem these have serious long-term effects that are starting to assert themselves: • Climate change provoked by green house gas emissions • Reduced soil fertility and • Pollution • Increasing populations are putting pressure on water supplies and ancient aquifers are beginning to run dry • Prices of key minerals and food have been rising for most of the last decade • Result: may generate political instability as food and household costs escalate
Population III • Optimistic View • Important to distinguish between • short term – where prices rise and resources become scarce and • Long term within which human ingenuity responds to those changes by finding new ways of fulfilling needs and wants more easily and cheaply • In addition not all problems of environmental degradation, resource scarcity and price rises are due to population increase • In many situations bad politics, social injustice, corruption and conflict cause more harm • Economic success of emerging economies in recent decades as increased demand for commodities and in the absence of an equivalent increase in production and thus their prices.
Population IV • While the Classsicals tended to look at growing populations as a threat to prosperity, we now often view growing populations as important for growth • As countries transition from high to low death and birth rates, the population’s age structure changes and the economically dependent-proportion declines • This transition can create one (or more) forms of “demographic dividend”: • Labor supply increases as a greater proportion of total populations joins the working age group (15-64 years) • As each worker’s number of dependents falls, the worker is able to save more to finance deepening of the capital stock and to raise labor productivity • As dependency declines, more can be invested in healthcare and education for each child raising the quality of the human capital stock • As per capita income increases, demand increases for consumer goods.
Population V • Some analysts attribute the extremely fast economic growth in a number of Asian countries – Hong Kong, Singapore, and South Korea between the 1960s and 1990s to a demographic dividend • Studies argue that a sizable portion – in some cases up to one third, of the increase in GDP per capita during those decades could be ascribed to positive impact of demographic changes. • However unclear whether this experience is repeatable elsewhere and • Whether in other countries similar demographic changes could actually have adverse effects • Moreover seem to be scope for significant economic development even without such demographic changes.
Population VII • Even if a country experiences an increase in the relative size of its working age population there is no guarantee this will turn into economic development • What happens will depend on the use that the government and private sector make of such a window of opportunity to: • Increase the workforce participation rate – the proportion of the working age population that is productively employed; and • Provide opportunities for the efficient investment of the expected higher levels of savings associated with a larger working age population.
Population VIII • Important areas of public policy that need to make use of the demographic dividend include • Improving and making the public health system more effective • Increasing the provision and quality of education • Introducing economic policies that promote labor market flexibility, openness to trade and savings. • Negative Scenario • A reduction in the number of children can provide breathing space for countries enabling them to develop infrastructure and policies capable of yielding higher growth rates in the future
Population IX • Yet trying to coordinate such a combination of demographic and institutional changes may prove difficult; • Country could find itself in a situation where hit has a high proportion of working age citizens who are not productively employed • Might be left unprepared for an inevitable aging of its population • Rather than a demographic dividend the country could experience problems of youths • In these situations the unemployed or underemployed are often prone to violent behavior
Population X • Many countries are now more concerned with declining or slowing rates of population growth • Demand side started with Hansen and the stagnationists in the 1930s – slowing population would require less investments – feeding back to slack demand and slow growth -- vicious circle • Supply side view – neoclassicals 1950s – demographic dividend facilitated East Asia miracle • Over the next 40 years Japan and Europe will see working-age populations shrink by 30 million and 37 million respectively • China’s working age population will keep growing for 15 years or so then turn down. • In 2050 China will have 100 million fewer workers than it does today