In “Population Growth and Economic Growth: Some More Correlations,” Robin Barlow (1994) contests Julian Simon’s (1989) argument that there is no significant relationship between the rate of population growth and the rate of growth of per capita income. Barlow’s assertion is based upon the notion that “lagged fertility”[1] is an important variable in the relationship between population growth and per capita income growth which Simon overlooked in his analysis. Barlow concludes that, when “lagged fertility” is taken into account, the correlation between the population growth rate and the per capita income growth rate can be distinguished as significantly negative in the short-run and significantly positive in the long-run. “Hence,” says Barlow, “in a two-variable correlation, current population growth appears to have a zero impact on current per capita income growth (as Simon argued), even when it really has a negative short-run effect.”[2]
Barlow defines “lagged fertility” as the average of the net fertility rate over the six-year period beginning 17 years before the start of the measured economic growth period (if the economic growth period is 1968-74, then lagged fertility is the net fertility rate over the years 1951-56).[3] According to Barlow, lagged fertility is a relevant and operative variable in the relationship between population growth and per capita income growth because the level of fertility 17 years ago impacts the growth of today’s labor force and, thus, the growth of today’s economy. Barlow found lagged fertility to be positively correlated with economic growth in each of the 144 cases he studied. After controlling for this variable in his analysis of 50 countries with the highest rates of lagged fertility, Barlow observed a significant negative correlation between the rates of population growth and the rates of per capita income in these countries – the 25 countries with population growth rates below 3 percent had per capita GDP growth rates that averaged 3.1 percent annually, and the 25 countries with population growth rates above 3 percent had per capita GDP growth rates that averaged only 1.7 percent.[4] Barlow suggests that a positive relationship between lagged fertility and economic growth masked a negative relationship between population growth and economic growth in Simon’s study. He argues further that a negative correlation between per capita income growth and population growth is likely as the result of a rise in the denominator of the per capita income ratio, a reduction in the savings rate (as a consequence of higher dependency burdens), or a decline in the percentage of women participating in the labor force. Thus, Barlow not only provides evidence against Simon’s theory, he also provides reasons for why his assertion is viable.
The implications of Barlow’s analysis relate to a theory about the growing gap in per capita income levels between rich and poor countries advanced by Edmund Sheehey (1996). The results of Barlow’s analysis imply that the highest rates of per capita GDP growth are “enjoyed” by the countries with high lagged fertility and low current fertility.[5] Countries that meet these standards are those in East and Southeast Asia which, according to Barlow, now have a “narrow window of opportunity” to witness the growth of their economies because soon low current fertility rates will lead to a reduction in the growth rate of the labor force. This idea holds the relationship between population growth, labor force growth, and economic growth in high regard as does Sheehey’s dismissal of the notion that low-income countries are caught in a “poverty trap.”[6] Sheehey argues that the per capita income levels of poor countries will turn around once the differences between population and labor force growth rates in these countries decline over time. He bases this assertion upon evidence that convergence of per capita income levels among rich countries is unaffected by whether growth is measured as per capita or per worker; however, that divergence of per capita income levels between rich and poor countries and among poor countries is “linked” to the fact that population growth rates are greater than labor force growth rates in poor countries and less than labor force growth rates in rich countries.[7] Thus, Sheehey, too, is an advocate of considering the effects of multiple variables - population growth, fertility, and labor force growth – in determining rates and directions of economic growth.
[2] Ibid., 154.
[3] Ibid., 155.
[4] Ibid.
[5] Ibid., 157.
[6] Sheehey, Edmund. “The Growing Gap Between Rich and Poor Countries: A Proposed Explanation.” World Development, 1996. 1383.
[7] Ibid.