Population Determinants

Topics: City, Random effects model, Population growth Pages: 5 (1664 words) Published: August 28, 2013
Background of the Study

According to United Nations Population Fund (2007), “In 2008, for the first time in history, more than half of the world’s population will be living in towns and cities. By 2030 this number will swell to almost 5 billion, with urban growth concentrated in Africa and Asia.”

There are many factors that affect the increase or decrease of a population. Common factors include birthrate, medical advances, productivity, and so on. There have been a lot of debates and discussions as to whether an increase in population is good for the economy or not. Solow distinguished the population growth into two effects: steady state and transitional. In the steady state, the economy grows as the population grows because the per capita growth in the steady state does not affect the population growth. However, in the transition effect, high population growth imposes negative impact on the economy. The increase in population causes the economies to use their scarce resources to compensate for the rapid increasing demand for capital needed (Klasen & Lawson, 2007).

Population growth is a major factor for the supply and demand of housing. It may push prices of houses up or down. The affordability of renting or owning a place may be a problem to some who moved from different cities, and changed living preferences. Most likely, an individual would move from a rural area to an urban area. The cities offer more, if not better, choices than rural areas. In the cities, you could find the best schools, wider job availability, higher wage, broader target market, more effective health services, etc. In principle, there are just more opportunities living in the city given that there is good governance. Therefore, cities offer a more economically favorable setting to address the social and environmental problems than rural areas can.

For this paper, we would be focusing on a panel data set gathered from 64 cities for two time periods: 1980 and 1990. We would test then observe if there exist any relationships between the populations of the cities, cost of average rent, per capita income, and number of college students enrolled.

Review of Related Literature
Previous studies show that the housing affordability and average income of a household contributes in the population in the cities. Gabriel et al (p8, 2005) define housing affordability as a “term usually denoting the maximum amount of income which households should be expected to pay for their housing” In addition, PCA (2007) and Whitehead (1991) agrees that housing affordability is the relationship between expenditure on housing and household income. With these researches in mind, we can say that the average rent of a house in a city affects the population of that said city. Moreover, the household income also affects the population. The number of college student enrollees also affects the population of the city because of the preferred type of education, accessibility, as well as, affordability of education. There are also studies showing there is a preference of investing in education near home. This would not only save time but also a lot of money from traveling, separate utility bills, etc. Other countries also provide in-state tuition and scholarships. The out-of-state tuition could be two to three times higher than the in-state. Another reason why some prefer to study near home is the familiarity and culture of the place. However, some may leave the city to live independently, travel, learn something new from another city, etc. The main point is, it is a choice that the individual has to make (Hunt, n.d.).

Operational Framework
The data has 128 observations retrieved from Wooldridge datasets. It observed 64 cities in two time periods. The dependent variable for this model is population, while the independent variables are average rent, per capita income, and number of college students enrolled. The apriori expectiation for this model will utilize...

References: Karantonis, A. (n.d.) Population growth and housing affordability in the modern city - Sydney a case study. Retrieved from http://www.prres.net/papers/Karantonis_Population_Growth_and_Housing_Affordability.pdf
United Nations Population Fund. (2007, May). Linking Population, Poverty, and Development. Retrieved from http://www.unfpa.org/pds/urbanization.htm
Hunt, P. (n.d.) What Are Some Advantages of Attending College Near Home? Retrieved from: http://www.ehow.com/info_8128663_advantages-attending-college-near-home.html#ixzz2Z5VObs6j
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