In their article, “Aggregate Population and Economic Growth Correlations: The Role of the Components of Demographic Change”, Kelly and Schmidt observe the correlation between population and economic development. They do this through studies of the variations of the CBR and the CDR and how an increase or decrease in births and/or deaths affects the income per capita of a nation. “These studies, reviewed by Kelly and Schmidt, seem to reveal a negative association between population and economic growth based on international cross country data for the 1980s.” (p. 544)
Kelly and Schmidt found that the effects of a nation’s CBR vary according to the time period. Some studies state that births have a negative effect on growth. However, the authors establish that:
1) “The effect of the CBR becomes increasingly negative over time, with a sizeable jump in the 1980s.” But, they attribute this to the effects of saving and dependency became more and more powerful in the 1980s due to “capital shortages, languishing aggregate saving, high interest rates and rapid debt accumulations.” (p. 553)
2) “Although death-rate reductions contributed positively in each decade, this contribution declined monotonically over time.” (p.553)
3) “The impact of lagged births, initially negative, becomes positive and is large in the 1980s…This result should put to rest the notion that births have uniformly negative effects on growth.” (p. 553)
The purpose of the article was based on empirical “cross-country” evidence and ascertained that; “the rate of population growth does not appear to have a notable impact on per capita output growth.” (p.553) Their findings were that, “the impact of the rate of population growth on per capita output growth:
1) Is not statistically significant in the 1960s or 1970s….
2) Is negative, statistically significant, and large in the 1980s.
3) Varies with the level of economic development: it is negative in the LDCs and sometimes positive for the DCs.
Models exploring density and size, in addition to population growth, also tell us that:
4) Population density is the only demographic term exerting a statistically significant effect (positive) in the 1960s and 1970s:
5) All components of demographic change exert a statistically significant effect in the 1980s, where the effect of population size and population density is positive. The ‘net’ effect of all three components of demographic change is negative, on average, for all countries.” (p. 544)
The principle argument for the negative effect of births as stated by Brander and Dowrick, is that “past births” (current adults) are an element of the existing work force, while, “current births deter economic growth through adverse effects on investment.” (p. 546)
To somewhat reinforce this claim, Kelly and Schmidt found that an increase in the CBR strongly reduces economic growth, yet a decrease in the CDR increases economic growth. The bottom line is that Kelly and Schmidt performed their study in three growth periods (1960-1970, 1970-1980 and 1980-1990) and found that there was no rock-hard consistency in the theory. So, “the rate of population growth does not appear to have a notable impact on per capita output growth.” (p. 553)