Lesson 9:

GLOBAL DEMOGRAPHY

Lesson Outcomes:
At the end of this lesson, students are expected to:
1. Analyze the theories of population growth and decline.
2. Determine the implications of rapid growth of population or over population
in the world.

The Demographic Transition: Three Centuries of Fundamental Change

Before the start of the demographic transition, life was short, births were many,
growth was slow and the population was young. During the transition, first mortality
and then fertility declined, causing population growth rates first to accelerate and then
to slow again, moving toward low fertility, long life and an old population. The transition
began around 1800 with declining mortality in Europe. It has now spread to all parts of
the world and is projected to be completed by 2100. This global demographic transition
has brought momentous changes, reshaping the economic and demographic life cycles
of individuals and restructuring populations. Since 1800, global population size has
already increased by a factor of six and by 2100 will have risen by a factor of ten. There
will then be 50 times as many elderly, but only five times as many children; thus, the
ratio of elders to children will have risen by a factor of ten. The length of life, which has
already more than doubled, will have tripled, while births per woman will have dropped
from six to two. In 1800, women spent about 70 percent of their adult years bearing and
rearing young children, but that fraction has decreased in many parts of the world to
only about 14 percent, due to lower fertility and longer life.

These trends raise many questions and controversies.

a. Did population grow so slowly before 1800 because it was kept in

equilibrium by Malthusian forces?

b. Did mortality begin to decline because of medical progress, because of

rising per capita income or for some other reason?

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 c. Did fertility begin to fall because of improved contraceptive technology
and family planning programs, or were couples optimizing their fertility all
along and reduced it in response to changing economic incentives?

d. Are we approaching a biological limit to life expectancy, or can we expect

to see continuing or even accelerating longevity gains?

Some predictions suggest that global fertility is projected to fall to 2.0 children
per woman, but in Europe it has been only 1.4 for some time, and in East Asia it is 1.8;
why should we expect fertility decline to stop at 2.0? Low fertility and increasing
longevity cause a dramatic change in the population age distribution, with a ten-fold
increase in the ratio of elderly to children. Will the societal costs of the elderly be
catastrophic? In the past, there has been great concern that rapid population growth in
third-world countries would prevent economic development, but most economists have
downplayed these fears. Similarly, environmentalists fear that world population is
already above the carrying capacity of the biosphere, while most economists are
complacent about the projected 50 percent increase in population over this century. In
this paper, I will describe these demographic changes in greater detail, and I will also
touch on these questions and controversies.

Before the Demographic Transition

According to a famous essay by Thomas Malthus, first published in 1798, slow
population growth was no accident. Population was held in equilibrium with the slowly
growing economy. Faster population growth would depress wages, causing mortality to
rise due to famine, war or disease—in short, misery. Malthus called this mortality
response the “positive” check. Depressed wages would also cause postponement of
marriage, resulting in prostitution and other vices, including contraception; this he
called the “preventive” check. Since population could potentially grow more rapidly than
the economy, it was always held in check by misery and vice, which were therefore the
inevitable human lot. Economic progress could help only temporarily since population
could soon grow to its new equilibrium level, where misery and vice would again hold it
in check. Only through moral restraint—that is, the chaste postponement of marriage—
did Malthus believe that humanity might avoid this fate, and he thought this an unlikely
outcome.

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 In Western Europe in the centuries before 1800, marriage required the resources
to establish and maintain a separate household, so age at first marriage for women was
late, averaging around 25 years, and a substantial share of women never married (Flinn,
1981, p. 84; Livi-Bacci, 2000, pp. 99 –107). Although fertility was high within marriage,
the total fertility rate (TFR) was moderate overall at four to five births per woman (Livi-
Bacci, 2000, p. 136). Mortality was also moderately high, with life expectancy at birth
between 25 and 35 years (Flinn, 1981, pp. 92–101; Livi-Bacci, 2000, pp. 61–90), but
this was heavily influenced by high mortality in infancy and childhood. Population
growth rates were generally low, averaging 0.3 percent/year before 1700 in western
Europe, but sometimes rising above 1 percent in the nineteenth century.3 In Canada
and the United States, marriage was much earlier because land was abundant, and
population at first grew rapidly, but then decelerated in the nineteenth century.

Outside of Europe and its offshoots, fertility and mortality were higher in the
pretransitional period, and change in fertility and mortality came later. Data on
mortality or fertility are only occasionally available for third-world countries before
World War II (Preston, 1980).

The Total Fertility Rate is the sum across all ages of the birth rates at each age
and, therefore, measures the total number of births a surviving woman would
have over her reproductive life, either actually for a generation of women or
hypothetically for a given calendar year, which is the more common usage.

Life expectancy at birth is the average age at death for an actual generation or
hypothetically the average age at death implied by the age-specific death rates in
a given calendar year, which is the more common usage

Although pretransitional fertility was typically high in third-world countries, its

levels were far below the hypothetical biological upper limit for a population (as opposed
to an individual), which is around 15 to 17 births per woman (Bongaarts, 1978). The
contraceptive effects of prolonged breastfeeding, often combined with taboos on sex
while breastfeeding, led to long birth intervals and reduced fertility. Abortion was also
important, and sometimes the practice of coitus interrupts had an important effect. In
some settings, marriage patterns also limited fertility, although not as strongly as in
Western Europe.

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 At the aggregate level, population growth throughout the regions of the world was
slow over the past millennium, but there was a puzzling similarity in long swings about
the growth path, such as stagnation in the fourteenth and seventeenth centuries and
more rapid growth in the fifteenth and eighteenth centuries. While exchanges of disease
through exploration and trade may have played some role, global climatic change was
probably the main driving force (Galloway, 1986).

Mortality Declines, Fertility Declines and Population Growth

The classic demographic transition starts with mortality decline, followed after a
time by reduced fertility,4 leading to an interval of first increased and then decreased
population growth and, finally, population aging. I will consider these major stages in
turn.

Mortality Declines
The beginning of the world’s demographic transition occurred in northwest
Europe, where mortality began a secular decline around 1800. In many low-income
countries of the world, the decline in mortality began in the early twentieth century and
then accelerated dramatically after World War II.

The first stage of mortality decline is due to reductions in contagious and

infectious diseases that are spread by air or water. Starting with the development of the
smallpox vaccine in the late eighteenth century, preventive medicine played a role in
mortality decline in Europe. However, public health measures played an important role
from the late nineteenth century, and some quarantine measures may have been
effective in earlier centuries. Improved personal hygiene also helped as income rose and
as the germ theory of disease became more widely known and accepted. Another major
factor in the early phases of growing life expectancy is improvements in nutrition.
Famine mortality was reduced by improvements in storage and transportation that
permitted integration of regional and international food markets, smoothing across local
variations in agricultural output. Secular increases in incomes led to improved nutrition
in childhood and throughout life. Better-nourished populations with stronger organ
systems were better able to resist disease. Life expectancy is still positively associated
with height in the industrial country populations, plausibly reflecting childhood health
conditions (Fogel, 1994; Barker, 1992).

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 The high-income countries of the world have largely attained the potential
mortality reductions due to reductions in infectious disease and increases in nutrition.
In recent decades, the continuing reduction in mortality is due to reductions in chronic
and degenerative diseases, notably heart disease and cancer (Riley, 2001). In the later
part of the century, publicly organized and funded biomedical research has played an
increasingly important part, and the human genome project and stem cell research
promise future gains.

Many low-income populations did not begin the mortality transition until
sometime in the twentieth century. However, they then made gains in life expectancy
quite rapidly by historical standards. In India, life expectancy rose from around 24 years
in 1920 to 62 years today, a gain of .48 years per calendar year over 80 years. In China,
life expectancy rose from 41 in 1950–1955 to 70 in 1995–1999, a gain of .65 years per
year over 45 years. Such rapid rates of increase in low-income countries will surely taper
off as mortality levels approach those of the global leaders.

Fertility Transition
Between 1890 and 1920, marital fertility began to decline in most European
provinces, with a median decline of about 40 percent from 1870 to 1930 (Coale and
Treadway, 1986, p. 44). The preceding decline in mortality may have been partly
responsible, although it cannot explain the timing.

Most economic theories of fertility start with the idea that couples wish to have a
certain number of surviving children, rather than births per se. If this assumption holds,
then once potential parents recognize an exogenous increase in child survival, fertility
should decline. However, mortality and fertility interact in complicated ways. For
example, increased survival raises the return on post birth investments in children
(Meltzer, 1992). Some of the improvement in child survival is itself a response to parental
decisions to invest more in the health and welfare of a smaller number of children
(Nerlove, 1974). These issues of parental investment in children suggest that fertility
will also be influenced by how economic change influences the costs and benefits of
childbearing.

Bearing and rearing children is time intensive. Technological progress and

increasing physical and human capital make labor more productive, raising the value
of time in all activities, which makes children increasingly costly relative to consumption

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goods. Since women have had primary responsibility for childbearing and rearing,
variations in the productivity of women have been particularly important.

The importance of contraceptive technology for fertility decline is hotly debated,

with many economists viewing it as of relatively little importance. The European fertility
transition, for example, was achieved using coitus interrupts. This debate extends from
the interpretation of the past to prescriptions for current policy (Pritchett, 1994; Gertler
and Molyneaux, 1994; Schultz, 1994).

In much of the world, fertility has in fact fallen to levels well below the 2.1 births
per woman that would just replace one generation by the next, and it is not yet clear
whether it will fall farther, rebound toward replacement or stay at current levels.

Population Growth

The combination of fertility and mortality determines population growth,

Global population projections are regularly prepared by the United Nations and
the U.S. Census Bureau. The method could be described as common sense, informed
by careful measurement and inspection of trends and current levels and a distillation
of historical patterns of decline for fertility and mortality. The central current projections
from the United Nations, which are consistent with some other global projections,
anticipate that global population will reach 8.9 billion by 2050 and just below 9.5 billion
by 2100—a 50 percent increase from its current size (see Figure 5). The National
Research Council (2000, p. 213), based on a careful analysis of past forecasting errors
by the United Nations, concluded that there is a 95 percent probability that the actual
population in 2050 will fall between 8.2 and 10.2 billion. A comparable analysis cannot
be done for the 2100 forecasts, but the United Nations’ high-low range extends over a
very wide interval from 5.2 to 16.2 billion. This great uncertainty must be kept in mind
when considering all the projections of fertility, mortality and population size for the
twenty-first century. The population projection for the More Developed Countries
population is nearly at, with population decrease in Europe and Japan offset by
population increase in the United States and other areas. Most of the projected
population increase takes place in the Less Developed Countries, which gain 1.8 billion,
or 43 percent. However, the greatest proportional gain comes in the Least Developed
Countries with their higher fertility and more rapid growth. These countries gain 1

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billion in population, or 151 percent. The relative shares of the three groups will change
a good deal over the next 50 years.

Shifts in Age Distribution: The Last Stage of the Demographic Transition

The patterns of change in fertility, mortality and growth rates over the demographic
transition are widely known and understood. Less well understood are the systematic
changes in age distribution that are an integral part of the demographic transition and
that continue long after the other rates have stabilized.

A Classic Example: The Case of India

In India, the pretransitional total fertility rate is about six births per
woman (Panel A), and life expectancy is about 25 years (Panel B). India’s mortality
decline leads its fertility decline by 50 years. The fertility transition here is slow
relative to East Asia’s, but similar to Latin America’s. These trends interact to
create a population growth rate that rose from less than 0.5 percent per year in
1900 to more than 2 percent per year by 1950 before starting to decline (Panel
C). India’s total population quadrupled in the twentieth century and is projected
to increase by another 60 percent in the twenty-first century, with the growth
rate of the population leveling out to near zero by 2100 (Panel D).

The Transition in Age Distribution by Current Development Category

The past and projected Total Dependency Ratios for the Least, Less and More
Developed Countries are shown in Figure 7; that is, the sum of the population under 15
and over 65 years divided by the population in the intermediate range of 15– 64 years.
Remember that even in 1950, the Least Developed Countries had higher fertility and
higher mortality than the Less Developed Countries, and change since then has been
slower for them. The Least Developed Countries moved slowly out of the phase of rising
youth dependency and entered the bonus phase around 1980. For these countries, the
total dependency ratio is projected to fall sharply from 2000 to 2050. At the same time,
the median age is projected to rise by nine years by 2050, from 18.1 to 27.1 years.

The Less Developed Countries entered the bonus phase earlier, around 1970, and
will finish it around 2020, after which the total dependency ratio will be rather at, since
declining child dependency will offset rising old-age dependency. Their median age is
projected to rise strongly by 13.3 years between 2000 and 2050, from 25.2 to 38.5 years.

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 The More Developed Countries are out of the bonus phase and have already aged
considerably. They already have the median age that the Less Developed Countries are
projected to achieve by 2050, at which time the median age in the More Developed
Countries will have risen another eight years to 45.2 years. The total dependency ratio
in the More Developed Countries is projected to rise sharply over the next 50 years as
their low fertility increasingly affects labor force size and the baby boom generations
move into old age.

Lower Fertility or Longer Life Expectancy?

Both low fertility and longer life contribute to the aging of the population. But the
implications of these factors for causes of shifts in the population distribution and for
how society might react to the aging of the population are rather different.

When population aging is due to declining fertility, it raises the share of the
elderly population without altering the remaining life expectancy (or the health status
or vigor) of older individuals. Such aging reflects a choice made by individuals to raise
fewer children. The desire to have fewer children may be related to the rise of public
sector pensions, which disconnect old-age support from individual fertility, and may
have played some role in causing low fertility in industrial nations. The Least Developed
Countries as a group are in the midst of their fertility decline, which is causing a
substantial proportion of their population aging. While lower fertility may go with
reduced total parental expenditures on children, it also raises the ratio of elderly to
working-age people, other things equal, with no corresponding improvement in health
to facilitate a prolongation of working years.10 For this reason, population aging due to
reduced fertility may well impose important resource costs on the population, regardless
of institutional arrangements for old-age support.

By contrast, population aging due to declining mortality is generally associated

with increasing health and improving functional status of the elderly. While such aging
puts pressures on pension programs that have rigid retirement ages, that problem is a
curable institutional one, not a fundamental societal resource problem, since the ratio
of healthy, vigorous years over the life cycle to frail or disabled years has not necessarily
changed.

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Some Consequences of the Demographic Transition

The three centuries of demographic transition from 1800 to 2100 will reshape the
world’s population in a number of ways. The obvious changes are the rise in total
population from 1 billion in 1800 to perhaps 9.5 billion in 2100—although this long-
term estimate is highly uncertain due largely to uncertainty about future fertility. The
average length of life increases by a factor of two or three, and the median age of the
population doubles from the low 20s to the low 40s. Many More Developed Countries
already have negative population growth rates, and the United Nations projects that the
population of Europe will decline by 13 percent between now and 2050. But many other
changes will also be set in motion in family structure, health, institutions for saving and
supporting retirement and even in international flows of people and capital.

At the level of families, the number of children born declines sharply and
childbearing becomes concentrated into a few years of a woman’s life. When this change
is combined with greater longevity, many more adult years become available for other
activities. The joint survivorship of couples is greatly increased, and kin networks
become more intergenerationally dense, while horizontally sparser. These changes
appear to be quite universal so far. However, whether childbearing is concentrated at
younger ages or at older ages and whether age at marriage rises or falls seems to vary
from setting to setting, and patterns are still changing even in the populations farthest
along in the transition. Parents with fewer children are able to invest more in each child,
reflecting the quality-quantity tradeoff, which may also be one of the reasons parents
reduced their fertility (Becker, 1981; Willis, 1974).

The processes that lead to longer life may also alter the health status of the
surviving population, but the change could go either way. For example, mortality decline
may permit less healthy or more disabled people to live longer, thereby raising age-
specific disability rates. Alternatively, the decline in damage from trauma and disease
in earlier life may reduce rates of disability and illness as people age. For the United
States, it appears that years of life added by declining mortality are mostly healthy years,
and that at any given age, the health and functional status of the population are
improving (Costa, 2002; Manton, Corder and Stallard, 1997; Freedman, Martin and
Schoeni, 2002). Apparently, years of healthy life are growing roughly as fast as total life
expectancy, although this is more clearly true for years free of mild disability than

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severe. In other industrial populations, the story is more mixed, and no general
conclusion is yet possible. Trends in health, vitality and disability are of enormous
importance for the economic and social consequences of aging and, indeed, for human
welfare more broadly.

The economic pressures caused by the increasing proportion of elderly are

exacerbated in the More Developed Countries by dramatic declines in the age at
retirement, which for U.S. men fell from 74 years in 1910 to 63 years in 2000 (with the
average age of retirement measured by the age at which the male labor force
participation rate fell below 50 percent; Burtless and Quinn, 2001). Generous public
pension programs permitting early retirement, combined with heavy implicit taxes on
those who continue working, have played an important role in causing earlier retirement
in industrial nations since the 1960s (Gruber and Wise, 1999). The growing ratio of
retirees to workers is bringing various policy responses. So-called “parametric” reforms
tinker with pay-as-you-go defined benefit programs, reducing benefits, raising taxes and
eliminating the incentives for early retirement. Sweden, Italy and some other European
countries have introduced “notional defined contribution” pension systems, whereby
pay-as-you-go systems mimic defined contribution programs, removing incentives for
early retirement and passing on to individual retirees the financial risks of rising
longevity. Other countries, particularly in Latin America, are making the painful
transition to funded public systems. Often these policy changes encounter fierce
opposition from workers, but population aging makes reform inevitable. In some
countries, like the United States, population aging will generate more intense financial
pressures on publicly funded health care systems than it does on pension systems.
Overall, the proportion of U.S. GDP spent on government programs for the elderly is
projected nearly to triple over the next 75 years without reforms, while the public
expenditure shares for the children and working age people remain relatively • at (Lee
and Edwards, 2002).

Population aging, together with the growth of age-related public transfer systems
for pensions, education and health, creates massive positive fiscal externalities to
childbearing. In aging high-income nations with generous support for the elderly, the
net present value of future taxes minus benefits for an incremental birth may be several
hundred thousand dollars (Lee, 2001), giving governments a powerful incentive to

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encourage childbearing. In developing countries with younger populations and public
programs focused on children, the fiscal externalities and incentives run in the opposite
direction (Lee and Miller, 1990).

At the international level, there are intriguing issues about the extent to which
the flow of people and capital across borders may offset these demographic pressures.
As population growth has slowed or even turned negative in the More Developed
Countries, it is not surprising that international migration from third world countries
has accelerated. Net international migration to the More Developed Countries has
experienced a roughly linear increase from near-zero in the early 1950s to around 2.3
million per year in the 1990s. Of course, these net numbers for large population
aggregates conceal a great deal of offsetting international gross migration flows within
and between regions (United Nations, 2002).

For example, prior to 1970, Europe was a net sending region, but since then it
has been a net receiver of 17 million immigrants. During the past decade, repatriation
of African refugees reversed the net flows from the Least Developed Countries. But
overall, while More Developed Countries may seek to alleviate their population aging
through immigration, U.N. simulations indicate that the effect will be only modest, since
immigrants also grow old, and their fertility converges to receiving country levels.

If flows of immigrants only partially offset population aging, might international

flows of capital offer a way of cushioning the financial effects of population aging?
Population aging may cause declining aggregate saving rates, but with slowing labor
force growth, capital/labor ratios will probably rise nonetheless and proŽ t rates fall,
particularly if there is a move toward funded pensions. Capital flows from the More
Developed Countries into the Less and Least Developed Countries might help to keep
the rate of return earned on pension funds from falling. However, simulations indicate
that exporting capital to the younger Less Developed Economies would help the
industrial economies only slightly. The much smaller size of third-world economies
would limit the gains (Borsch-Supan et al., 2001).

Dramatic population aging is the inevitable final stage of the global demographic
transition, part and parcel of low fertility and long life. It will bring serious economic
and political challenges. Nonetheless, life in aging, capital-intensive and culturally
diverse high-income countries should be pleasant, provided our institutional structures

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are sufficiently flexible to allow us to adapt our life cycle plans to the changing
circumstances and provided we are willing to pay for the health care and the extended
retirement that we apparently want.

*****

References:

Lee, Ronald. (2003) The Demographic Transition: Three Centuries of Fundamental

Change. Journal of Economic Perspectives. 17. 167-190.
10.1257/089533003772034943. – August 22, 2020

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