Current Births versus Past Births

Current Births versus Past Births

Contents:

The Effect of Current Births
The Effect of Past Births
The Ideal Period

The Effect of Current Births

Current births add to current consumption and add nothing to current production. Thus they tend to reduce savings and lower the rate of growth of per capita income. Kelley found that a 1% increase in current Crude Birth Rate (CBR) reduced the growth rate of per capita income G(Y/P) by .34%.

The Effect of Past Births

Births 15 years ago represent young people who are now entering the labor force. They add to consumption but they add even more to production, therefore they tend to increase savings and they tend to increase the rate of growth. Kelley found that a 1% increase in Crude Birth Rate (CBR) fifteen years earlier (t-15) increased the growth rate of per capita income G(Y/P) by .17%

The Ideal Period

The growth of the labor force (LF) will lag behing the growth of the population by about 15 years. Hence, during the fifteen years after the peak of population growth there will be a period where population growth rates are falling and where labor force growth rates are rising, both of which tend to increase the rate of growth of per capita GDP. This is what was happening in the "East Asian "Miracle" countries in recent years.

Current Births versus Past Births
Contents: The Effect of Current Births The Effect of Past Births The Ideal Period
The Effect of Current Births Current births add to current consumption and add nothing to current production. Thus they tend to reduce savings and lower the rate of growth of per capita income. Kelley found that a 1% increase in current Crude Birth Rate (CBR) reduced the growth rate of per capita income G(Y/P) by .34%.

The Effect of Past Births Births 15 years ago represent young people who are now entering the labor force. They add to consumption but they add even more to production, therefore they tend to increase savings and they tend to increase the rate of growth. Kelley found that a 1% increase in Crude Birth Rate (CBR) fifteen years earlier (t-15) increased the growth rate of per capita income G(Y/P) by .17%

The Ideal Period The growth of the labor force (LF) will lag behing the growth of the population by about 15 years. Hence, during the fifteen years after the peak of population growth there will be a period where population growth rates are falling and where labor force growth rates are rising, both of which tend to increase the rate of growth of per capita GDP. This is what was happening in the "East Asian "Miracle" countries in recent years.