Economic Growth 4 - Population and Economic Growth Flashcards Preview

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Flashcards in Economic Growth 4 - Population and Economic Growth Deck (70)
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1
Q

How can population be a determinant of income in two different ways?

A

-In some contexts the size of the population is important, whereas-In others the growth rate is important.

2
Q

As a determinant of income, when is the size of the population important?

A

When we think about the interaction of population with some fixed natural resource.

3
Q

When the size of a population is an important determinant of income, which countries will be richer/poorer?

A

Holding other factors constant, a country with a lot of people relative to the amount of resources will be poorer.

4
Q

As a determinant of income, when is the growth rate of a population important?

A

When we think about the interaction of population with a producible input such as capital.

5
Q

Which observation did Malthus begin with in regards to population?

A

The force that limited human population in the face of such potential fertility was simply the limited quantity of available resources—in particular, land.

6
Q

How did population growth and welfare interact according to Malthus?

A

The smaller the population relative to the available land, the better off people would be. The better off people were, the faster population would grow. As the population grew, however, the amount of land available for each person would fall, and people would become poorer. This poverty would in turn limit population growth. Eventually society would reach a level of income commensurate with constant population.

7
Q

How did human’s differ from other life forms according to Malthus?

A

Although animals and plants were limited in their multiplication only by limitations on resources (“positive check”), humans were subject to a second sort of limitation: the deliberate reduction of fertility to prevent poverty (“preventative check”).

8
Q

How did Malthus’ check mechanisms (“positive check” and “preventive check.”) operate to lead humans away from the fate of all other living beings?.

A

Because humans could apply a preventive check, they were not fated to live in the same dire circumstances as animals. But when this check failed, the positive check was waiting in the wings.

9
Q

In the Malthusian model, when is income per capita, yss, at the steady-state level?

A

The steady-state population size, Lss, corresponding to where the Yss is consistent with zero population growth.

10
Q

What happens in the Malthusian model if the population is smaller than Lss?

A

If the population is smaller than Lss, income per capita will be above yss, so the population will be growing.

11
Q

What happens in the Malthusian model if the population is larger than Lss?

A

If the population is larger than Lss, income per capita will be below yss, so the population will be shrinking.

12
Q

According to Malthus, which countries reach their steady state levels of income and population?

A

No matter what a country’s initial level of population, it will end up at the steady state.

13
Q

How would improvements in the productive environment, or the discovery of new land be represented graphically in the Malthusian model?

A

Such a change is represented by a shift outward in the relationship between population size and income per capita. At any given level of population, income per capita will be higher. The relationship between population growth and the level of income per capita would not change.

14
Q

How would improvements in the productive environment, or the discovery of new land affect the standard of living according to the Malthusian model?

A

The immediate effect will be increased living standards. Over time, however, people who are better off will produce more children, and the larger number of people will dilute the benefits. The population will continue to grow until the standard of living has returned to its old level

15
Q

How would an economy differ long after the introduction of improvements in the productive environment, or the discovery of new land according to the Malthusian model?

A

In the new steady state of the economy, there will be a larger population, but the level of income per capita will not have changed. Better technology or more land, then, will not lead to healthier, happier people, just to more of them.

16
Q

If the Malthusian model predicts that improvements in productivity will not make people better off, what did Malthus offer as an answer?

A

That “moral restraint” in preventing births is the only way in which a society can raise its standard of living.

17
Q

How would preventing births, morally or not, be represented graphically according to the Malthusian model?

A

Such a change is represented by a downward shift in the curve relating population growth to income per capita. At any given level of income, population growth will be lower. The curve relating income to population size is unchanged.

18
Q

How would an economy differ after adopting a policy of moral restraint according to the Malthusian model?

A

A country that adopted a policy of moral restraint would have a lower steady-state population but a higher steady-state level of income per capita.

19
Q

Which piece of evidence suggests that the Malthusian model clearly does not apply to the world today?

A

One of the key pieces of the Malthusian model is that higher income raises the growth rate of population. But contrary to what Malthus would have predicted, the relationship between these two measures is negative: The richest countries in the world have the lowest rates of population growth.

20
Q

Although population has grown enormously over the last two centuries, this increase has not prevented income per capita from rising as well. Why couldn’t Malthus have seen this coming?

A

Growth in income has been possible because technological progress has been rapid enough to compensate for falling levels of natural resources per capita.

21
Q

What is capital dilution?

A

The negative effect of population growth on capital per worker.

22
Q

According to the Solow model, what happens in a country in which population is growing rapidly?

A

If the quantity of capital in the country did not change, then population growth would result in less capital being available for each worker, which would lead to a decline in the amount of output produced per worker.

23
Q

According to the Slow model, what is the only way a country in which population is growing rapidly could maintain a constant level of capital per worker?

A

By investing a large fraction of its output in building new capital.

24
Q

Suppose an economy’s number of workers is rising at a rate of 1% and capital doesn’t depreciate. How large would the quantity of investment have to be if we wanted to keep the level of capital per worker constant in the face of this labor force growth according to the Solow model?

A

The quantity of investment would have to be large enough to supply each new worker with as much capital as each existing worker has to work with, so investment would have to equal 1% of the capital stock.

25
Q

Suppose an economy’s number of workers is rising at a rate of 1% and capital doesn’t depreciate. What would happen to capital per worker if there were no investment in the face of this growth of the labor force according to the Solow model?

A

The quantity of capital per worker would decline at a rate of 1% per year.

26
Q

In the Solow model, what is the equation for the change in the amount of capital per worker taking population growth into account?

A

Δk = sf(k) - (n + δ)k

27
Q

In the Solow model, when is an economy experiencing population growth in the steady state?

A

When Δk = 0where sf(k) = (n + δ)k

28
Q

How is population growth represented in the Solow model graphically?

A

Raising the rate of population growth rotates the curve representing (n + δ)k counterclockwise and leads to a lower steady-state level of output.

29
Q

How does the Solow model, modified to include population growth, provide a potential explanation for why countries with high population growth rates are poorer than countries with low population growth rates?

A

Higher population growth dilutes the per-worker capital stock more quickly and so lowers the steady-state level of output per worker.

30
Q

Assume the production function:
f(k) = Ak^α
where the parameter A measures productivity. What is the condition for the steady state?

A

sAk^α = (n+δ)k

31
Q

Assume the production function:
f(k) = Ak^α
where the parameter A measures productivity.
What is the equation for the steady state level of capital per worker?

A

kss = (sA/(n+δ))^(1/(1-α))

32
Q

Assume the production function:
f(k) = Ak^α
where the parameter A measures productivity.
What is the equation for the steady state level of output per worker?

A

yss = A(kss)^α =

A^(1/(1-α)) (s/(n+δ))^(α/(1-α))

33
Q

What’s an expression for the ratio of steady-state income in Country i to steady-state income in Country j?

A

yss_i/yss_j = ((ni+δ)/(nj+δ))^(α/(1-α))

34
Q

What is a main conceptual difference between the Malthusian and Solow models?

A

The Malthusian model treats population as an endogenous variable—something determined within the model. By contrast, the Solow model treats population growth as exogenous (determined outside the model).

35
Q

What is the idea of demographic transition?

A

The process by which a country’s demographic (population) characteristics are transformed as it develops.

36
Q

Changes in population growth result from the interaction of which two changing patterns of death and birth?

A
  • Mortality Transition

- Fertility Transition

37
Q

How do demographers measure mortality?

A

By calculating life expectancy at birth, which is the average number of years that a newborn baby can be expected to live.

38
Q

Which 3 forces have lead to reduced mortality?

A
  • Improvements in the standard of living
  • Improvements in public health measures
  • The role of medical treatments in curing diseases.
39
Q

What is the explanation for the rapid declines in mortality in the developing world relative to the slower decline in the developed world?

A

Many of the advances that accumulated slowly in the rich countries arrived in the developing world almost all at once.

40
Q

What is the TFR?

A

The total fertility rate (TFR) is the number of children children that a woman would have if she lived through all of her childbearing years and experienced the current age-specific fertility rates at each age.

41
Q

How is it that population growth rates in Europe and the United States never approached the levels seen in the developing world today?

A

In historical populations, only a fraction of women were lucky enough to have lived through all of their childbearing years. Many never made it to maturity, and many more died during their fertile years, often in childbirth.

42
Q

Which measure combines the effects of fertility and mortality in determining population growth is the net rate of reproduction.

A

The net rate of reproduction (NRR)

43
Q

What is the NRR?

A

The net rate of reproduction (NRR) is defined as the number of daughters that each girl who is born can be expected to give birth to, assuming that she goes through her life with the mortality and fertility of the current population.

44
Q

What is another way to think about the NRR?

A

Consider it as the factor by which the number of girls in each generation will increase.

45
Q

A constant population (pop. growth = 0) is consistent with which NRR?

A

NRR = 1

46
Q

What does a NRR of 2 correspond to?

A

That the number of girls, and thus the population as a whole, will double every generation.

47
Q

When is a woman said to have an “unmet need” for contraception?

A

If she is biologically capable of becoming pregnant, wants no more children within the next two years, and is using neither traditional nor modern contraception.

48
Q

When are woman who are currently pregnant or have just given birth are considered to have an unmet need for contraception?

A

If they report that their pregnancy was unintended.

49
Q

The data on unmet need suggest that the biggest contributor to differences in fertility is not women’s ability to achieve their desired fertility. What is it then?

A

Desired fertility itself.

50
Q

This book discusses four possible channels for reduced fertility. What’s the first one?

A

One reasonable hypothesis is that the decline in mortality is in fact causing the decline in fertility.

51
Q

How could the decline in mortality in fact be causing the decline in fertility?

A

Families don’t care about the number of children who are born but about the number who survive to adulthood. As mortality falls, it becomes possible for families to produce the same number of surviving adults with lower fertility.

52
Q

The typical pattern is for declines in mortality to precede declines in fertility, leading to a long period of time in which the NRR is above 1. What could explain this pattern?

A

It takes parents some time to recognize that mortality has fallen and consequently to adjust their fertility.

53
Q

It’s possible for a decline in mortality to produce a more than offsetting decline in fertility—that is, for mortality decline to lower the NRR. Why is that?

A

When mortality is high, parents have even more children than is necessary to produce the number of survivors they want. The extra children are a form of insurance against the riskiness of survival. A drop in mortality rates eliminates the need for this extra fertility.

54
Q

Why does fertility not rise as income rises?

A

One effect of income growth is that it raises the price of children. One of the things that children demand most is their parents’ time, and when a country’s income rises, the opportunity cost of that time—in other words, the wage that a parent could earn if he or she were not taking care of children—also rises.

55
Q

Which two effects determine why fertility doesn’t not rise as income rises?

A
  • An income effect—When you are richer you can afford more of everything.
  • A substitution effect—When your wage is higher, children are relatively more expensive.
56
Q

What does whether the income or substitution effect dominates—that is, whether economic growth raises or lowers desired fertility—depend on?

A

The exact nature of households’ preferences for children versus the other things that they could buy with their money.

57
Q

What are the four explanations for the current reduction in fertility?

A
  • The effect of mortality reduction
  • The income and substitution effects
  • Resource flows between parents and children
  • The Quantity-Quality trade-offs
58
Q

What’s the first reason reduced flows between parents and children could explain reduced fertility rates.

A

As a country develops, the economic benefits of children tend to fall while the cost of raising children rises.
Moreover, costs for education can continue well into the third decade of the child’s life.

59
Q

What’s the second reason reduced flows between parents and children could explain reduced fertility rates.

A

In developing countries, children often provide for their parents in old age.
necessity.
In developed countries, by contrast, financial markets are sufficiently well developed that people can save for their old age.

60
Q

How does the quality-quantity trade-off help explain reduced fertility rates?

A

Parents hope that the resources they devote to rearing and educating their children will have payoffs in terms of better health, higher earnings later in life, and the general well-being of their children. We can think of these expenditures, beyond the minimum necessary for survival, as investments in the quality of the child.

61
Q

How d parents investment in the quality of their children rather than their quantity impact economic conditions to further reduce fertility rates?

A

Children who receive more education and better health care will be more productive workers as adults, and this increase in the quality of workers is an important contributor to economic growth.

62
Q

How do demographers study mortality?

A

By constructing a survivorship function.

63
Q

What does a survivorship function show?

A

The probability that a person will be alive at different ages. The survivorship function starts at a value of 1 at the moment of birth and declines to reach a value of 0 at the maximum possible age.

64
Q

How do we define life expectancy at birth mathematically?

A

Σπ(i)
(from i=0 to t)

Mathematically, we define life expectancy at birth as the sum of the probability that a person will be alive at each possible age. Let π (i) be the probability that a person will still be alive at age i—in other words, the survivorship function—and let T be the oldest possible age.

65
Q

How can life expectancy at birth be thought about graphically?

A

As the area under the survivorship function.

66
Q

What is the age-specific fertility rate?

A

The average number of children that women of a given age will bear in a given year.

67
Q

Mathematically, the TFR and the age-specific fertility rate, which we denote as F(i), are related according to the following equation.

A

TFR = ΣF(i)

from i=0 to t

68
Q

How can TFR be thought about graphically?

A

As the area under the curve denoting age-specific fertility.

69
Q

How can we examine the interaction of fertility and mortality.

A

The survivorship function, π (i), tells us the probability that a person will still be alive at age i. The age-specific fertility rate, F(i), indicates the number of children that will be born to a woman at age i. Combining these two, we can calculate the expected number of children that a newborn girl will produce at each age.

70
Q

What is the NRR graphically?

A

βΣπ(i)F(i)
(from i=0 to t)
Where β is the fraction of live births that are girls.

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