Essays on economic development and demographic transition

The causal relationship between economic development and demographic transition has remained controversial. Some authors believe that there is no relation; some others believe that development leads to demographic transition but can not provide satisfactory explanations. In this dissertation, we review the generalized facts and find that there is a strong statistical correlation between economic development and demographic transition in many dimensions. We then review the theoretical literature. We find that Malthus is still the most important theoretician and remains unsurpassed. The only major flaw in Malthus is that there is no household labor supply function. Surprisingly, no later author has filled in this gap. Notestein articulated the stylized description of demographic transition, but did not offer a good economic explanation. Gary Becker considered the demand for children as a consumer good, but did not develop a household labor supply function. Thus no progress was made to go beyond Malthus. Numerous other authors formulated numerous hypotheses, none of which resolves the issue of the causal relation between economic development and demographic transition. We present a two factor, two good model to explain both economic development and demographic transition. An increase in skill increases labor productivity and the cost of reproduction of labor, which together raise the real wage rate permanently. The increase in skill also leads to a rise in the ratio of urban output to rural output. Economic development leads to demographic transition. It reduces mortality and calls for a reduction in the fertility rate, since the long run equilibrium labor force (of the survivors who become workers) must be stationary. Alternatively, economic development changes the choice between a large number of short lived children and a small number of long-lived children in favor of the latter.