Chapter 12.docx

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Chapter 12: Population, education and human capital
Intro
Labor is the most malleable factor of production -> human capital. Developing human capital is key
to developing a society, and not doing so can be disastrous.
A Population Problem
Assumoption: rapid pop rwoth can cause the total pop to exceed a natjuon’s productive cap so that
real income person falls or rises unnecessarily slowly. The two factors that affect income per person
are pop growth and total income growth. C&D argue that inc in avg pop growth leads to lower pop
growth rate.
The natural and the actual rate of pop growth
Natural rate of pop growth is the birth rate minus the death rate. The actual rate of pop growth can
sometimes be different. Why? It is the same as the natural, except that it takes into account
migration. How do we account for differences between countries? Demographic transition
The demographic transition
Birth rates weren’t always so high. What’s changed?
Demographic transition and now- developed economies
o Structural changes and industrialization changed the nature of many countries. Their birth
and death rates both fell, resulting in lower natural pop growth rates. Demographic
transition is the name given to this process (less than 20 birtyhs/ deaths per 1000). This
happened bcz increased standards of living lead people to choose to hae fewer kids
Demographic transition and LDGCs
o Crude birth rates remained high in LDCs, even though death rates started decreasing after
1900. As advances such as vaccines, improved health and sanitation standards, etc. were
transferred to 3W, death rates decrease.
o Death rates are decreasing because of carryover of advances, not because of internal
change.
Graphing the demographic transition
o Phase is pre- Industrial Rev (IR): BR and CR is high everywhere. Phase II is post- IR: birth rates
decrease for 1W because of high income; death rates decrease for everyone. Act growth
rate doesn’t decrease for 3W.
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