SUBJECT: ADVANCED ECONOMETRICS TERM PAPER
COURSE INSTRUCTOR: PROF. K.L.KRISHNA
TOPIC: THE BIRTH RATE AND ECONOMIC DEVELOPMENT: AN EMPIRICAL STUDY OF DEVELOPING COUNTRIES SUBMISSION DATA: 17/11/2010
The birth rate has long interested economists as well as demographers. In recent years the emphasis of research by the members of both professions has been on the facts and their consequences for economic welfare. It has been agreed almost by every observer that preventive checks are necessary for raising the standard of living above the subsistence level in the underdeveloped areas. However, there is little agreement on the validity of the proposition that economic development automatically will dampen the birth rate. Thus in my paper I try to test empirically the exact relationship between birth rates and certain basic measures of economic development like per capita income and infant mortality. Another issue that in recent times has become a subject of debate is how significant per capita income in explaining cross-country variations in birth rates. In this context majority of the studies and empirical tests have pointed out that compared to per capita income Infant Mortality Rate (IMR) is a more important determinant of birth rates. One more issue that has often been raised is the direction of the relationship between birth rate and per capita income. While the popular thought is that this relationship is negative, the existing empirical studies and the theoretical considerations cannot decide whether this relation is negative or positive. This paper thus tries to provide quantitative information regarding the main explanatory factors of birth rate in developing countries as well as to check amongst per capita income and IMR which is more significant as a determinant of birth rate. At the same time I will try to figure out the nature of relationship between per capita income and birth rate using my set of inter-country data. In many developing countries like Greece, birth rate in the long run has shown a declining trend, which in the recent times has been accompanied by mass emigration of workers from Greece to Western European countries. If allowed to continue, such decline in the rate of population growth would have adverse effects on the countries’ socioeconomic dimensions and viability. Hence the question of whether there exist inherent factors related to the process of economic development that cause such decline in birth rate is of considerable interest for Greece and might have important policy implications for all such countries so as to achieve a satisfactory rate of economic growth in the future. The statistical approach followed in this paper consists in using cross-section data for developing countries at the same point of time. LITERATURE REVIEW-EARLIER RELATED WORK ON THE THEME
As stated above relationship between birth rate and economic development has always been an issue for discussion amongst the economists as well as the demographers. Various statisticians and econometricians have time and again tried to find out the various socio, economic and demographic factors explaining variations in birth rate both across countries as well as within countries across regions. Constantine G. Drakatos in his famous paper “The Determinants of Birth Rate in Developing Countries: An Econometric Study of Greece” provided a quantitative information regarding the main explanatory variables of birth rate in Greece with a purpose to investigate whether economic development, per se, has a dampening effect on population growth. He used cross-section data for different geographic regions across Greece at the same point of time. Drakatos using the method of OLS regressed crude birth rate on percentage of population of both sexes in the age bracket 15-44 years, IMR (demographic factors), level of development in various regions reflected in per capita income (economic factor), ratio of...