Economic-demographic interactions and the impact of investments in population control release_6a5duks525b3jpxu2un2ctgjkm

Abstract

The interaction between economic and demographic factors in the Philippines was examined, analyzing the effects of investment in fertility control on the birthrate, population size, and such economic variables as gross national product (GNP), wage rate, and family income. A family planning model that was constructed and is used to project population program cost and births prevented is grafted to and simulated with a larger economic/demographic model. The simulation results are anayzed. The economic demographic model to which the family planning subsystem was grafted is a modified version of the model constructed by Encarnacion et al. (1974). It is basically a neoclassical model, a closed economy in which the real wage rate is determined by the intersection of the demand and supply of labor. The demand for labor is derived from a Cobb-Douglas production function on the assumption that labor is paid the value of its margin product, and the labor supply is determined by age and sex specific labor force participation rates and population. Capital accumulation is influenced by population size through its effect on government and private consumption expe nditures. Fertility rate is determined by duration of marriage and the level and distribution of family incomes. The model was used to develop projections from 1970 through 2000. Results show that the effects on per capital income and real wage rate seem significant, yet family income appears largely unaffected and the effect on the traditional investment to output ratio (I/Y) seems minimal. One of the outcomes of the projection without family planning is that, if the economy were to depend solely on its own savings, the average annual rate of growth of gross national product (GNP) would be only about 4.32%, which is less than the historical growth rate of 6% and the present government longterm target of 8%. The result suggests that foreign investments and loans would have to play an increasingly important role in the economic growth of the Philippines unless the gross domestic investment of GNP ratio is increased substantially. Aggregate output is reduced due to a relatively smaller labor force. Thus, it is suggested that if population control programs are accompanied by an increase in the labor participation rate, particularly of women, the payoffs from family planning may be larger. Closer examination of the nature of the payoffs from the family planning program would reveal that they basically stem from the decrease in the number of persons sharing in national output and not from increased production and saving. The observation suggests that population control does not necessarily lead to more rapid economic growth defined as sustained increase in total output.
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