Demography in Traditional Societies ? In traditional societies population growth rates are low (about 0.4% per year) ? Between 1400 and 1850, China grew from 72 million to 412 million (1/3 of world’s population) ? This is despite birth rates in developing countries (including China) are high (30 to 40 per 1000) … each women had, on average, 6 children … but so are death rates (20 to 40 per 1000) …. so population is in a precarious balance … ? China was in same demographic pattern through 1949 … birth rates still very high … but civil war and famine and poor sanitation kept death rates high … – In 1952, population of China was 552 million (from 1850 to 1950) Demographic Transition Phase I ? Nutrition and sanitation improves, health of the population improves … death rates decline (and infants mortality falls) … ? Birth rates do not fall right away … ? Therefore: population accelerates … up to 3% per year … Figure VII-1: Crude Birth and Death Rates 0 10 20 30 40 50 60 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 V i t a l R a t es p e r 1000 Births Deaths Hi birth rates; low death rates … hi population growth rates Figure VII-1: Crude Birth and Death Rates 0 10 20 30 40 50 60 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 V i t a l R a t es p e r 1000 Births Deaths Disruption from the Great Leap … Demographic Transition Phase II ? Population explosion does not last forever … ? In countries that are growing and developing, birth rates begin to decline. ? What causes birth rates to decline: – Families adjust to higher survival rates – Adjust their family “target rate” How is target rate decided? ? Economics of Children ? Two sets of benefits and costs: – Pre-modern – After growth starts Risk and Information Behavioral Determinants A1 A2 A3 A4 A5 A6 Risk Costly Selfish Consump. Effort Risk Information (+) (-) Averse C1 Asymetric Information C2 Incentive Problems (Moral Hazard and Adverse Selection) C4 Demand for Insurance Preferences, Environment and Fertility Behavior in Rural China Environment: Risk and costly poor information Preferences Children as tools of economic: we will see that many of the benefits of children are particularly great for parents in agrarian developing countries because material and behavioral determinants have created an economic environment in which families: demand labor for their on-farm activities lack credit demand insurance because of the riskiness of agriculture in the absence of insurance markets children are able to play a role in allowing the family to access the things they demand: labor, insurance, and credit. Cost and Benefits of Children: Costs: Economic Monetary Food, clothing, and shelter; child care; education Implicit Child care leads to a loss of earning time (usually by mother) Deciding on the target: given the decision making environment, count up the costs and benefits … Cost of Children (continued) Psychic Anxiety Loss of leisure time (and adult goods conumption) [costs involve tradeoffs: more children, less inheritance per capita of fixed resource, like land; may be unable to educate all, due to high cost of schooling and fixed budget constraint— same tradeoffs felt by family and national leaders] Benefits: Labor—source of income: children become family members (have full incentives to work hard and are not subject to moral hazard problems like hired labor). In other words, having children produce a superior form of labor. Less likely to leave the job, even if punish. Children can do many things in the household, including housework and helping to raise other children. Insurance: Children take care of parents when they are old. Skilled labor—source of income + insurance: Can get a job outside of the farm that increases productivity and can lead to covarying income source. Benefits Boys more valued than girls if the “tradition” is for male children to marry in the village and female children to marry outside of the household—keep the child that has a comparative advantage in agriculture (the male), since agriculture is the industry that the family has the resources for (i.e., land). Girls are valuable as a source of insurance—therefore make the insurance more effective: marry them out of the village (after they have been an on-farm or off-farm laborer) … Value of girl seen by bride price or dowry … Girls are usually taken care of by the families … though poorest of poor often do practice (female) infanticide. Lots of children needed in highly risky environments: Benefits could be lost to sickness or death of child. The anomaly: Fertility should be higher with higher incomes because the costs are more easily born – FALSE in almost every case … Explanation by Becker: Couple maximize: a.) number of children; b.) child quality; c.) conventional goods and services. Couples have constraints on their time and incomes (have a budget contraint). Fall in fertility can be shown to fall as incomes rise by saying that the cost of children rise, especially because the opportunity cost of parents’ time goes up. Given the cost of child quantity rises, the family opts to invest in quality and spends more money on a decreasing number of children. Other factors reinforce Beckers’s arguments: As incomes rise, the things that children are used for: labor on the farm; insurance; are less important … Others: claim “taste and preference” for children change .. maybe .. but, also may be that these other changes influence the preferences … Target in Pre-modern times ? High Birth Targets – Farm households need: ? Labor for agriculture (can’t hire it) ? Labor for the off farm sector: –For income – For credit and insurance ? For other insurance needs ? Old age insurance Targets in times of Growth and Development ? As family income rises and savings rise ? Capital in agriculture replaces labor ? Living in cities with job … or at least one spouse with a job ... ? Gov’t pension and social security and insurance market … ***** ? Children are not needed (as much) … target falls Figure VII-1: Crude Birth and Death Rates 0 10 20 30 40 50 60 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 V i t a l R a t es p e r 1000 Births Deaths Falling birth rates; leveling off death rates … population growth rates finally fall Table VII-1: Fertility Decline in East Asia Total Fertility Rate China Korea Thailand Taiwan Hong Kong 1950-55 6.25.26.66.7 4. 1955-60 5.46.16.46.0 4.7 1960-65 5.95.46.45.1 5.3 1965-70 6.04.56.14.2 4.0 1970-75 4.84.15.03.4 2.9 1975-80 2.92.84.32.7 2.3 1980-85 2.52.43.02.2 1.8 1985-90 2.41.72.61.7 1.4 Source: Shultz 1995 China’s rates fall like other East Asian nations … except started much earlier, given income levels … As fertility falls … after long time, population growth rates finally fall ? Population growth rates after long times in Europe finally fall to zero ? Asian countries have fallen faster … ? China falling, too 0 0.5 1 1.5 2 2.5 3 3.5 Germany Japan China, 1950s China, now Question: how did China’s rate fall so far, so fast … Structural Determinants--Urban ? Urban – Better Health for Children (reduce target fertility) – Rise is in employment (why?) – Pension plans (why?) – Women’s education (why?) – Women’s employment (why?) Structural Determinants--Rural ? Rural – Better Health for Children (reduce target fertility) – Commune system’s welfare system (why?) ? How about: – Education – men/women (why not?) – Off farm employment or pensions (why not?) Figure VII-1: Crude Birth and Death Rates 0 10 20 30 40 50 60 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 V i t a l R a t es p e r 1000 Births Deaths No precedent … for fall in the 1970s and early 1980s .. If other countries never experienced such a rapid fall in fertility, what is the role of policy? One Child Policy – not yet ? Until mid-1970s—Start and Stop: – 1953: contraceptive information/services on voluntary basis – Great Leap Forward: Mao says China’s people are its greatest assets, personally rejects family planning – 1962-64: pilot family planning education program in urban areas – Cultural Revolution (stop again) Interesting: fall in 1960s – not policy! Background for One Child Policy ? Early 1970s: “later marriages / longer spacing between births / fewer children” – [how? Through urban “work units” … party ideology – pressure …] – Started the fall, but no change except reduced third child births (and above) … i.e., still no one child policy … ? Mid-1970s: worried about baby boom echo in early 1990s … see population out of control … in typical China-style, set out on radical, unprecedented policy road … The policy ? “Most desirable family size is ONE” ? Array of sanctions and penalties (only a few rewards) ? Close monitoring … apply for birth permit ? Controversy in China … fluctuations in strictness … ? Strict times: mandatory IUDs for women with one child; sterlization for couples with two children; abortions for unauthorized pregancies ? Less strict times: great pressure … come night after night after night … don’t allow 2 nd child into child care or pre-school … will not guarantee 2 nd child job … ? Big penalties for out-of-plan births (sometimes up to 1 year’s salary / income ? Great plunge in birth rates … One does not mean One ? Exceptions for minorities … ? In all but suburban areas, exceptions: – one boy or two child – one child … wait 5 years … another child – one child … pay for more CONSEQUENCES ? Exceptions caused China to miss their goal of keeping population to under 1.2 billion by 2000 … they hit 1.2 billion in 1995, ? But still progress in limiting population growth … China is now set to stop growing by about 2030 … at 1.6 billion …. ? Total fertility: 1.33 Consequences ? Gender consequences: – In normal country: 106 boys to 100 girls – China, 1930s: 120 boys to 100 girls (female infanticide) – In 1960s/1970s: 108 to 100 – 1980s: 111 to 100 – In some areas / remote rural areas: 130 to 100 Where are the missing girls? ? As in traditional China, especially in remote areas, could be female infanticide … [some, but not main reason] ? Families do not register girls … [census officials do not believe this is so … but of course they want to believe there results … probably not main reason] ? Select abortions … probably main reason ? Ultimate consequences: “bachelor problem” … rising premium for bride prices … may lead to illegal immigration … or even banditry … Why are boys better? ? Compare costs and benefits of boys versus girls: – Why traditionally does family give land to boys and marry girls out of village? [what is pattern in hunting and gathering societies?] – What is role of girl in family livelihood strategy? Worthless? If so, why not more female infanticide? – Girls are valuable … boys are more valuable … Figure VII-2: Dependency Rates 0% 5% 10% 15% 20% 25% 30% 35% 40% 1982 1990 1995 2000 2005 2010 2015 2020 2025 Total Young Old total young elderly This means that proportion of working age population that is between 15 and 64 will be 71% … good or bad for growth? What happens after 2010? Dependency ratio goes up? Consequences of dependency ratios ? When dependency ratios low, grow fast … fast growth is necessary … because: ? As dependency growth rises, growth will slow … why? Extra time and effort spent in caring for elderly … elderly do not save/they dissave … [this is one of reason for Japan’s slow down] [how has US cushioned impact?] [policy consequence: need to plan for social security – NOW! Conclusions ? Demography powerful force … ? China has tampered with population more than any nation in the history of the world … ? Policies to deal with consequences: – Nothing can do about bachelor problem – Start social security system – Implement health insurance in rural areas – Relax “One Child Policy” …