Authors: Kelley, Allen C.; Schmidt, Robert M.
Publication date: August 1994
This study undertakes a detailed empirical assessment, based on international cross-country data for the period from the 1960s, of the correlations between aggregate population and per capita output growth. Two notable findings are obtained. First, the correlations, which in earlier decades were not statistically significant, have turned strongly negative for the 1980s. Second, over the entire period from 1960, both the direction and the size of the correlations vary by the level of economic development: the correlation is most likely to be negative (positive) in relatively poor (wealthy) countries. An explanation for the new and statistically robust correlations is not yet available. On the one hand, possibly the negative consequences of rapid population growth associated with diminishing returns to capital and the environment are emerging as relatively more important forces than, say, the positive impacts of scale, induced innovation/technical change, and/or attenuating feedbacks. On the other hand, possibly the 1980s represent an anomaly, plagued as they were with world recession, war, droughts, structural adjustments, and declining and low terms of trade - especially in the high population growth-rate countries. In the first case, the negative correlations may persist; in the second, they may revert to the previous pattern of little or no association. Some modest evidence of persistence is presented that shows a negative impact of demographic dependency on saving rates for the 1980s. However, other avenues of demographic-economic interactions require empirical exploration before one can attach much confidence to the persistence of the new correlations.
Publisher: World Bank