Assessing the Relationship between Population Growth

and Economic Growth

Karen Chang Chih Hua Chen

Jessica Chen Derek Shum

Gabriela Alcaraz Dennis Yue

Overview

Problem: High population growth in developing countries

Solution: Economic growth Expanded labor force that utilizes the

productive capacity of women Reduces the need for large families to perform

the tasks of subsistence

Our Research

Developing countries: higher marginal productivity Average annual growth rate during 1965-99:

4.1% in low-income countries 4.2% in middle-income countries 3.2% in high-income countries

Trend: low-income countries will one day exceed the GDP of today’s high-income countries

However, population growth in developing countries > developed countries

Large increase in GDP in developing countries GDP growth is offset by faster population growth

Negative correlation: economic and population growth rates

Opposing Views

As income increases, both the birth and death rates decrease.

Since these forces are offsetting, the rate of population growth is independent of the rate of economic growth.

Variables in the Analysis Fertility : Birth rate

Economic Growth : GDP per Capita Growth

Regional Dummy Variables - to control for cultural differences across regions, religion dummy variables were incorporated in order to account for regional/cultural and religious differences which may influence birth rates.

Secondary school enrolment of females: incorporated based on the findings that higher female education levels contribute to lower birth rates

Variable Included in the Analysis

Variable MeasurementNumerical :Birth rate, crude (BIRTHRATE) per 1,000 peopleGDP per capita growth (GDPCAPITA) annual %Secondary school enrolment of females (SECONDENROL) % netRegional dummy variables:Europe and North America 0 = No, 1 = YesLatin America and the Caribbean 0 = No, 1 = YesEast Asia and the Pacific 0 = No, 1 = YesSub-Saharan Africa 0 = No, 1 = YesSouth Asia 0 = No, 1 = YesMiddle East and North Africa 0 = No, 1 = YesReligion dummy variables:Catholic 0 = No, 1 = YesMuslim 0 = No, 1 = YesOther 0 = No, 1 = Yes

Descriptive Statistics for Numerical Variables

GDPCAPITA BIRTHRATE SECONDENROL Mean 3.96586 13.18532 83.34208 Median 3.900848 12.8 85.07929 Maximum 11.47188 24.5 100 Minimum -2.01501 7.8 52.0957 Std. Dev. 2.821509 4.132517 10.06354 Skewness 0.20167 0.913336 -0.884038 Kurtosis 3.206517 3.104123 3.672264

Jarque-Bera 0.402111 6.555655 7.006982 Probability 0.817867 0.03771 0.030092

Observations 47 47 47

Histogram of GDP per Capita Growth

Histogram of GDP per capita

0

5

10

15

20

25

-2.01501 0.232805 2.48062 4.728435 6.97625 9.224065 and bigger

Class

Fre

qu

ency

Histogram of Birth Rate (per 1000 people)

Histogram of Birth rate

02468

10121416

7.8

10.5

8333

333

13.3

6666

667

16.1

5

18.9

3333

333

21.7

1666

667

and

bigg

er

Class

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Histogram of Secondary School Enrolment of Females

Histogram of Secondary enrollment

0

5

10

15

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52.0957 60.07975 68.0638 76.04785 84.0319 92.01595 andbigger

Class

Fre

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Regional Distribution of the Data

Number of countries analyzed by region (total = 47)

EUROPE and North America; 30

LATIN AMERICA AND

CARRIBBEAN; 9

EAST ASIA AND PACIFIC; 4

SUB-SAHARAN AFRICA; 2 Middle East and

North Africa; 1

South Asia; 1

Distribution of Countries by Religion

Number of countries by religion

CATHOLIC; 24

MUSLIM; 4

OTHER; 19

Scatter Diagrams of the Numerical Variables

Correlation Results

SECONDENROL BIRTHRATE GDPCAPITA SECONDENROL 1.000000 -0.502772 0.185021

BIRTHRATE -0.502772 1.000000 -0.381509 GDPCAPITA 0.185021 -0.381509 1.000000

Results of First Regression

Variable Coefficient Std. Error t-Statistic Prob. GDP -0.512892 0.203729 -2.517516 0.0143

C 15.51195 0.979876 15.83053 0R-squared 0.090106 13.46076Adjusted 0.075889 4.600245S.E. of 4.422247 5.841007Sum 1251.601 5.90736Log -190.7532 6.337889Durbin- 2.128674 0.014333

Schwarz criterion F-statistic Prob(F-statistic)

Included observations: 66

Mean dependent S.D. dependent var Akaike info

Dependent Variable: BIRTHRATEMethod: Least SquaresDate: 11/21/05 Time: 15:22Sample: 1 66

Heteroskedasticity

F-statistic 0.078416 0.92467Obs*R- 0.163892 0.921322

Variable Coefficient Std. Error t-Statistic Prob. C 16.306 7.656015 2.129829 0.0371

GDP 1.052923 3.199943 0.329044 0.7432GDP^2 -0.067145 0.32898 -0.204101 0.8389

R-squared 0.002483 18.96365Adjusted -0.029184 29.11559S.E. of 29.53738 9.65358Sum 54964.8 9.753109Log -315.5681 0.078416Durbin- 2.231902 0.92467

F-statistic Prob(F-statistic)

Mean dependent S.D. dependent var Akaike info Schwarz criterion

Method: Least SquaresDate: 11/21/05 Time: 15:26Sample: 1 66Included observations: 66

Probability Probability

Test Equation:Dependent Variable: RESID^2

White Heteroskedasticity Test:

Residuals vs. GDP per capita growth

Residuals vs. GDP

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-4

-3

-2

-1

0

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-4 -2 0 2 4 6 8 10 12 14

GDP

Res

idu

als

Residuals vs. Secondary school enrolment of females

Residual vs. Education

-5

-4

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-2

-1

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0 20 40 60 80 100 120

Secondary enrolment

Res

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Full Model Results

Variable Coefficient Std. Error t-Statistic Prob. CATHOLI -0.194416 0.780486 -0.249097 0.8047EDUCATI -0.032557 0.047279 -0.688602 0.4954EUROPE 0.182913 1.338587 0.136647 0.8921

GDP -0.262318 0.155818 -1.683493 0.1007LACARRI 5.891339 1.669575 3.528647 0.0011

ME 2.666171 3.360246 0.793445 0.4326MUSLIM 2.668915 1.91481 1.393827 0.1717SOUTHA 10.83694 3.283608 3.300315 0.0021SUBSAH 6.526576 2.111468 3.091014 0.0038

C 15.00119 4.155374 3.610071 0.0009R- 0.723493 13.18532Adjusted 0.656235 4.132517S.E. of 2.422957 4.794156Sum 217.2166 5.187805Log -102.6627 10.75691Durbin- 2.046554 0 Prob(F-statistic)

S.D. dependent var Akaike info Schwarz criterion F-statistic

Date: 11/23/05 Time: 12:01Sample(adjusted): 1 47Included observations: 47 after adjusting endpoints

Mean dependent

Dependent Variable: BIRTHRATEMethod: Least Squares

Regression model results excluding Europe and N.A., Education and Catholic

Variable Coefficient Std. Error t-Statistic Prob. GDP -0.251899 0.149184 -1.688515 0.0991

LACARRI 6.212096 1.015191 6.119143 0ME 3.007871 2.956901 1.017238 0.3152

MUSLIM 2.790613 1.793011 1.556383 0.1275SOUTHA 11.09942 2.890837 3.839517 0.0004

SUBSAHA 6.474434 1.720612 3.762868 0.0005C 12.1816 0.786785 15.48275 0

R-squared 0.718737 13.18532Adjusted 0.676548 4.132517S.E. of 2.350281 4.683551Sum 220.9528 4.959105Log -103.0634 17.03595Durbin- 1.977668 0

Schwarz criterion F-statistic Prob(F-statistic)

Included observations: 47 after adjusting endpoints

Mean dependent S.D. dependent var Akaike info

Dependent Variable: BIRTHRATEMethod: Least SquaresDate: 11/30/05 Time: 16:41Sample(adjusted): 1 47

White Heteroskedasticity test for full model

F-statistic 1.199988 0.322891Obs*R- 12.87128 0.301822

Variable Coefficient Std. Error t-Statistic Prob. C -16.54627 33.00627 -0.501307 0.6193

CATHOLI -1.884167 1.490539 -1.264084 0.2146EDUCATI 0.633015 0.837605 0.755744 0.4549EDUCATI -0.004398 0.005305 -0.829002 0.4127EUROPE -2.054369 2.524099 -0.813902 0.4212

GDP 0.673743 0.698411 0.964681 0.3413GDP^2 -0.046284 0.072137 -0.641616 0.5253

LACARRI 2.641373 3.141559 0.840784 0.4062ME -9.328664 6.721449 -1.387895 0.1739

MUSLIM 1.309848 3.86265 0.339106 0.7366SOUTHA -9.940727 6.51599 -1.52559 0.1361SUBSAH -2.886612 4.054695 -0.711918 0.4812R- 0.273857 4.62163Adjusted 0.045641 4.636241S.E. of 4.529205 6.074808Sum 717.9793 6.547187Log -130.758 1.199988Durbin- 1.943674 0.322891

Schwarz criterion F-statistic Prob(F-statistic)

Included observations: 47

Mean dependent S.D. dependent var Akaike info

Dependent Variable: RESID^2Method: Least SquaresDate: 11/23/05 Time: 12:05Sample: 1 47

White Heteroskedasticity Test: Probability Probability

Test Equation:

Regression birthrate vs. regional dummies

Variable Coefficient Std. Error t-Statistic Prob. EUROPE -0.039667 1.29711 -0.030581 0.9758LACARRI 6.9 1.464362 4.71195 0

ME 5.9 2.724476 2.165554 0.0362SOUTHA 13.3 2.724476 4.881672 0

SUBSAHA 6.6 2.11037 3.127413 0.0032C 11.2 1.218423 9.192211 0

R-squared 0.690078 13.18532Adjusted 0.652282 4.132517S.E. of 2.436846 4.73803Sum 243.4669 4.974219Log -105.3437 18.25824Durbin- 2.002811 0

F-statistic Prob(F-statistic)

Mean dependent S.D. dependent var Akaike info Schwarz criterion

Method: Least SquaresDate: 11/30/05 Time: 18:43Sample(adjusted): 1 47Included observations: 47 after adjusting endpoints

Dependent Variable: BIRTHRATE

Regression birthrate vs. regional dummies, GDP and education

Variable Coefficient Std. Error t-Statistic Prob. EDUCATI -0.035453 0.046463 -0.76304 0.45EUROPE 0.283048 1.327011 0.213298 0.8322

GDP -0.198786 0.149191 -1.332429 0.1905LACARRI 5.972144 1.606181 3.718225 0.0006

ME 5.394289 2.768537 1.948426 0.0586SOUTHA 13.39514 2.764075 4.846157 0

SUBSAHA 6.531946 2.111913 3.092905 0.0037C 14.92642 4.11658 3.625927 0.0008

R-squared 0.706116 13.18532Adjusted 0.653367 4.132517S.E. of 2.433041 4.77Sum 230.8678 5.084919Log -104.095 13.38648Durbin- 2.126694 0 Prob(F-statistic)

S.D. dependent var Akaike info Schwarz criterion F-statistic

Date: 11/30/05 Time: 16:43Sample(adjusted): 1 47Included observations: 47 after adjusting endpoints

Mean dependent

Dependent Variable: BIRTHRATEMethod: Least Squares

Final Regression Model

Variable Coefficient Std. Error t-Statistic Prob. CATHOLI 0.611282 0.998419 0.61225 0.5437

GDP -0.584917 0.180259 -3.244878 0.0023EDUCATI -0.161258 0.049413 -3.263474 0.0022MUSLIM 5.190597 1.862584 2.786771 0.008

C 28.19069 4.03927 6.979154 0R- 0.442458 13.18532Adjusted 0.389359 4.132517S.E. of 3.229295 5.282693Sum 437.9905 5.479517Log -119.1433 8.332662Durbin- 2.221721 0.000048

Akaike info Schwarz criterion F-statistic Prob(F-statistic)

Sample(adjusted): 1 47Included observations: 47 after adjusting endpoints

Mean dependent S.D. dependent var

Dependent Variable: BIRTHRATEMethod: Least SquaresDate: 11/23/05 Time: 12:12

Regression model considering interaction between the variables

Variable Coefficient Std. Error t-Statistic Prob. CATHOLI 2.272919 1.702012 1.335431 0.1889MUSLIM 4.58625 4.762702 0.962951 0.3411

GDP*CAT -0.553896 0.312338 -1.773389 0.0834GDP*MUS -0.069502 0.654762 -0.106149 0.916

C 12.73684 0.919679 13.84923 0R-squared 0.140812 13.18532Adjusted 0.058985 4.132517S.E. of 4.008786 5.715142Sum 674.9554 5.911966Log -129.3058 1.720847Durbin- 1.867785 0.163388

Akaike info Schwarz criterion F-statistic Prob(F-statistic)

Sample(adjusted): 1 47Included observations: 47 after adjusting endpoints

Mean dependent S.D. dependent var

Dependent Variable: BIRTHRATEMethod: Least SquaresDate: 11/30/05 Time: 16:46

Conclusion

Negative relationship between economic growth and population birth rates

Female education levels a negative relationship with population birth rates

Religions that discourage the use of birth control such as Catholicism and Muslim religions have a significant positive effect on birth rates

The End

Questions?