I've just discovered the following from The
Economist (11 August 2012) which might be of interest.
__________
ECONOMIES benefit when people start having
smaller families. As fertility falls, the share
of working-age adults in the population creeps
up, laying the foundation for the so-called
"demographic dividend". With fewer children,
parents invest more in each child's education,
increasing human capital. People tend to save
more for their retirement, so more money is
available for investment. And women take paid
jobs, boosting the size of the workforce. All
this is good for economic growth and household
income. A recent NBER study estimated that a
decrease of Nigeria's fertility rate by one child
per woman would boost GDP per head by 13% over 20
years. But not every consequence of lower
fertility is peachy. A new study by researchers
at the Harvard School of Public Health identifies
another and surprising effect: higher inequality in the short term.
Countries with very high fertility are usually
dirt-poor-peasants value extra hands, however
small, to help in the fields. (In Niger, which
has a GDP per person of $700, the average woman
can expect to bear more than seven children.)
Low-fertility countries (with significant
exceptions, such as China) tend to be rich. The
Harvard study confirms that this pattern is
replicated within countries: as a rule, the poor
tend to have larger families. The authors use
Demographic and Health Surveys (DHS), which
contain a lot of detail about family structure
and household assets. DHS data from 60 developing
countries enable them to divide households into
five income groups and to show that in every
continent, the "youth-dependency ratio" (the
number of children under 15 compared with the
working-age population) is lowest in the richest
group, next lowest in the next-richest group and
so on. The poorest group has the highest
youth-dependency ratio. The gap between top and
bottom is marked. Ratios in the richest
households are a third below those in the poorest ones.
Over time the differences in fertility between
rich and poor should narrow as everyone has fewer
anklebiters. So fertility will eventually fall
furthest among the poor, where it is highest to
start with. You might expect poor people to lead
this process of transition because they have more
scope to cut family size. In fact, they lower
their fertility rates more slowly than the
wealthy. According to the Harvard study, during
the past 20 years the average number of children
fell by about 50% more in the richest households
than it did in the poorest. In Côte d'Ivoire, for
example, the child-dependency rate in the poorest
group fell by 13% between 1994 and 2005. Among the richest, it fell by 32%.
This finding does not come out of the blue. A
2008 study of African countries found that, as
total fertility falls, the difference in
fertility by education group (adjusted for their
changing sizes) rises. Earlier research in Latin
America found that demographic change increased
the income gap between rich and poor. Inequality
tends to rise as fertility rates start to fall.
Why should this be? Poor families seem to face a
demographic-cum-income trap: poverty in the
parents' generation promotes higher fertility,
which is then associated with poverty in the next
generation. A tendency to have large, poor
families seems to be handed down from mother to
daughter. Conversely, the rich are more likely to
educate their daughters and have no trouble
obtaining contraceptives, so smaller,
better-educated families also pass from mother to
daughter. These trends reduce fertility among the
rich while leaving it higher among the poor.
However, things change when income rises. The
three countries in the Harvard study which saw
the largest declines in child dependency were
Côte d'Ivoire (with a GDP per head in 2011 of
$1,800), Namibia ($6,800) and Peru ($10,300). The
pattern of their demographic change shows a clear
progression. Poor Côte d'Ivoire saw its
child-dependency ratios fall most among the rich
and least among the poor. In Namibia child
dependency fell furthest in the middle of the
income range; the decline in the second-poorest
group was largest of all. In middle-income Peru,
the pattern was different again. There, child
dependency fell across the board by roughly equal amounts.
What seems to happen is that falling fertility
widens demographic differences in countries with
a per-person GDP of around $2,000; that the
forces of inequality and convergence are balanced
in countries where GDP per person is $5,000; and
that by the time this figure has reached $10,000
per person, the forces of convergence are
dominant. To put it another way, the rich lead
the decline in fertility, producing a short-term
increase in income inequality as they capture the
benefits of demographic change first. Then the
middle catches up as they educate daughters and
plan families, followed by the poor, so that
eventually fertility is lower across the board
and the economic benefits of the demographic dividend are spread more evenly.
Smoothing out the spike
That has two implications. First, the fall in
fertility helps explain why income inequality is
widening in developing countries. A World Bank
paper from 2008 reckoned that two-thirds of poor
and middle-income countries would experience a
rise in inequality before 2030, with demographic
shifts adding to inequality in four-fifths of all
cases. Second, to counteract this initial spurt
in inequality, there is an argument for doing
things that reduce fertility among the poor-such
as making contraception more widely available and
encouraging girls to go to school. This would not
only reduce the youth-dependency ratio more
quickly but also make people happier, since most
of the poor say that they want smaller families.
Falling fertility benefits poor countries a lot,
but it cannot do everything by itself.
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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