Population Growth, Income Distribution, and Economic Development

In this book, a model of long-term interrelationships between income distribution, population growth and economic development is developed and estimated from data for 54 countries. The results indicate that a reduction of income inequality leads to lower fertility and mortality, to improvedbasic needs satisfaction, and to lower labour force participation of young and old males and of females in Asia and Africa. The effect of income distribution on saving and consumption is found to be negligible. These outcomes suggest that family planning and health policies in LDCs will show better results when they are supplemented with policies aimed at makingthe poor benefit from economic growth. As regards development policy, the results indicate that a reduction of income inequality does not impair the formation of physical capital, but enhances the formation of human capital and lowers the growth rate of the labour force.

1 Introduction.- 1.1 Purpose of the study.- 1.2 Previous research on the subject.- 1.3 Approach of the present study.- 1.4 Outline of the study.- 1.5 Composition of the sample.- 1.6 Data and data quality.- I: Methodological Issues.- 2 Inequality measures in macro-analyses.- 2.1 Introduction.- 2.2 Aggregation of nonlinear micro-relationships and measures of inequality.- 2.2.1 Introduction.- 2.2.2 Alternative formulations of the nonlinearity bias.- 2.2.3 The nonlinearity bias and basic properties of inequality measures.- 2.2.4 The nonlinearity bias and auxiliary properties of inequality measures.- 2.2.5 The nonlinearity bias for the logarithmic function.- 2.2.6 Aggregation of ratios.- 2.2.7 Summary and conclusions.- 2.3 Application to income distributions.- 2.3.1 Introduction.- 2.3.2 Relationship of the nonlinearity bias to social welfare functions.- 2.3.3 Estimation from grouped data: I.- 2.3.4 Estimation from grouped data: II.- 2.3.5 Summary.- 2.4 Conclusion.- 3 Cross-national regression analysis.- 3.1 Introduction.- 3.2 Interpretation of the estimates.- 3.2.1 Introduction.- 3.2.2 Impact of omitted lagged variables.- 3.2.3 Impact of the omission of other explanatory variables.- 3.2.4 Summary and conclusions.- 3.3 Econometric problems.- 3.3.1 Introduction.- 3.3.2 Heteroscedasticity.- 3.3.3 Multicollinearity.- 3.3.4 Errors in the variables.- 3.3.5 Summary.- 3.4 Conclusion.- II: Partial Studies.- 4 Fertility.- 4.1 Introduction.- 4.2 Review of the literature on the impact of income inequality.- 4.3 Impact of household income on fertility.- 4.3.1 Proximate determinants of fertility.- 4.3.2 Easterlin’s synthesis framework.- 4.3.3 Direct impact of income on intervening variables.- 4.3.4 Indirect impact of income on intervening variables.- 4.3.5 Shape of the income-fertility relationship.- 4.3.6 Conclusions.- 4.4 Macro-level evidence on the shape of the income-fertility relationship.- 4.5 Regression results.- 4.6 Summary.- 5 Mortality.- 5.1 Introduction.- 5.2 Review of the literature on the impact of income inequality.- 5.3 Impact of household income on mortality.- 5.3.1 Causes of death and proximate determinants of mortality.- 5.3.2 Impact of household income on proximate determinants.- 5.3.3 Shape of the income-mortality relationship.- 5.3.4 Conclusions.- 5.4 Macro-level evidence on the shape of the income-mortality relationship.- 5.5 Regression results.- 5.6 Summary.- 6 Age structure of the population.- 6.1 Introduction.- 6.2 Demographic relationships in cross-national regression analyses.- 6.3 Long-term impact of fertility and mortality on the age structure.- 6.4 Regression results.- 6.5 Summary and conclusions.- 7 Income (in)equality.- 7.1 Introduction.- 7.2 Review of the literature on demographic determinants.- 7.3 Equality of personal incomes.- 7.3.1 Age-income profiles.- 7.3.2 Age and the equality of personal incomes.- 7.3.3 Numerical assesments of the age effect.- 7.3.4 Gender and the equality of personal incomes.- 7.3.5 Conclusions.- 7.4 Equality of household incomes.- 7.4.1 Household size and the equality of household incomes.- 7.4.2 Numerical assesments of the household size effect.- 7.4.3 Age and gender and the equality of household incomes.- 7.4.4 Conclusions.- 7.5 Regression results.- 7.6 Summary.- 8 Total income.- 8.1 Introduction.- 8.2 Properties of the Cobb-Douglas production function.- 8.3 Some non-conventional sources of growth.- 8.4 Regression results.- 8.5 Summary.- 9 Basic needs fulfilment.- 9.1 Introduction.- 9.2 Review of the literature on the impact of income inequality.- 9.3 Impact of household income on basic needs fulfilment.- 9.4 Regression results.- 9.5 Summary.- 10 Labour force participation.- 10.1 Introduction.- 10.2 Impact of income (in)equality.- 10.2.1 Review of the literature.- 10.2.2 Impact of household income on labour force participation.- 10.2.3 Macro-level evidence on the shape of the income-labour force participation relationship.- 10.2.4 Conclusion.- 10.3 Impact of population age and sex structure.- 10.4 Regression results.- 10.5 Summary.- 11 Consumption and saving.- 11.1 Introduction.- 11.2 Impact of income (in)equality.- 11.2.1 Impact of household income on consumption.- 11.2.2 Implications for relationship betweeen income equality and consumption.- 11.2.3 Review of empirical studies.- 11.3 Impact of population age and sex structure.- 11.3.1 Savings and the dependency ratio.- 11.3.2 Consumption and equivalence scales.- 11.3.3 An Integration.- 11.4 Regression results.- 11.5 Summary.- 12 Other dependent variables in the model.- 12.1 Introduction.- 12.2 Inequality of land holdings.- 12.3 Average household size.- 12.4 Share of labour force in agriculture.- 12.5 Population per physician.- 12.6 Summary.- III: The Simultaneous-Equations Model.- 13 Model specification and regression results.- 13.1 Introduction.- 13.2 Specification of the model.- 13.2.1 Structural equations.- 13.2.2 Identities.- 13.2.3 Properties of the model.- 13.3 Regression results.- 13.4 Conclusion.- 14 Summary.- Appendix A: Data sources.- Appendix B: The entire model.