Population and demography Urbanization, migration, economic development consequences

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Population and demography Urbanization, migration, economic consequences Population and demography The Philippines and the world L Cagandahan Abueg De La Salle University School of Economics World

4 billion (as of August 2016), Asia being the most populated (China, India, Indonesia), together with numerous LDCs (including Philippines) Most populated city: Tokyo, Japan (at 36 million) World

1 Population and demography Urbanization, migration, economic consequences Population and demography The Philippines and the world L Cagandahan Abueg De La Salle University School of Economics World population Estimated to be at 7.4 billion (as of August 2016), Asia being the most populated (China, India, Indonesia), together with numerous LDCs (including Philippines) Most populated city: Tokyo, Japan (at 36 million) World population, in billions Population Year Years elapsed Source: United States Census Bureau estimates Philippine population, in millions Source: Philippine Statistics Authority Census Years year elapsed Population Increase ,635, ,314,310 2,678, ,000,303 5,685, ,234,182 3,233, ,087,685 7,853, ,684,486 9,596, ,070,660 5,386, ,098,460 6,027, ,703,206 12,604, ,616,536 7,913, ,506,928 7,890, ,566,732 12,059, ,337,852 3,771, ,981,437 8,643,585 chapter 4: population and demography 1

2 is the statistical relationship between the decline in fertility and population growth Usually analyzed using data on childhood mortality rate, i.e., number of child deaths aged below five years old for every 1000 births Stages of demographic transition: 1. high birthrates and death rates 2. continued high birthrates; declining death rates because of improved medicine 3. falling birthrates and death rates, eventually stabilizing due to improved medicine and decline in the fertility rate Demographic transition From a high difference to a low difference Birth rates Death rates Consequence: the population growth rate is less than the replacement rate, i.e., the number of children on the average that is necessary to keep the population fixed over time Such decline in population cannot be realized in the short run, due to the fertility of the current generation, called the hidden momentum of population growth (0,0) time Hidden momentum of growth Family planning takes many years to achieve two-child family and eventually replacement fertility because today s children are future parents In Nigeria, If family planning began in 1990 Two-child family may achieve in 2035 (45 years) Replacement fertility would eventually reach in 2150 (115 years) Thailand has experienced demographic transition, and is expected to decline in population towards the end of the 21 st century (i.e., after the hidden momentum) chapter 4: population and demography 2

Hidden momentum: extreme case It can happen that birth rates are less than death rates: after the hidden momentum of population growth, the

, population growth is now less than replacement rates) Demographic transition From a high difference to a negative difference Death rates

Population pyramid LDCs population pyramid is truly pyramid-shaped with 40% younger than 19 years and less than 5% over 65.

3 Hidden momentum: extreme case It can happen that birth rates are less than death rates: after the hidden momentum of population growth, the population starts to shrink (i.e., population growth is now less than replacement rates) Demographic transition From a high difference to a negative difference Death rates Birth rates (0,0) time Japan has also experienced demographic transition, and now declining in population with high old-aged citizens Population pyramid LDCs population pyramid is truly pyramid-shaped with 40% younger than 19 years and less than 5% over 65. Of the youth, 2 billion are 19 years old and younger, and 400 million between DCs population structure is more like a cylinder with many middle-aged and elderly individuals Population pyramids: Thailand Population pyramids: Japan chapter 4: population and demography 3

In the mid-1990s Japan had a smaller proportion of over-65s than Britain or Germany.

Many rural Japanese villages have been old for years, because young people have left them for cities. Now the suburbs are greying, too.

Children have become so scarce that the large primary school is only about one-quarter full. Residents in their 70s outnumber children under ten by more than five to one (see chart).

If child morality is high, parents do not usually send children to school, especially when child labor is a socially-accepted institution Why child labor?

Latin American Countries, and the Philippines, which is a Keynesian fiscal policy (an indirect form of pump-priming as in recession periods) Possible solutions: i.

4 In the mid-1990s Japan had a smaller proportion of over-65s than Britain or Germany. Thanks to an ultra-low birth rate, admirable longevity and a stingy immigration policy, it is now by far the oldest country in the OECD. And senescence is spreading to new areas. Many rural Japanese villages have been old for years, because young people have left them for cities. Now the suburbs are greying, too. Today 47% of people in the Okutama administrative area the town and surrounding villages are 65 or older, and 26% are at least 75. Children have become so scarce that the large primary school is only about one-quarter full. Residents in their 70s outnumber children under ten by more than five to one (see chart). The Economist, 07 January 2017 Fertility decline is also explained by the prevalence of child labor: i. If child mortality is low, life expectancy is high, so is returns to education ii. If child morality is high, parents do not usually send children to school, especially when child labor is a socially-accepted institution Why child labor? The government is extending income transfers coupled with conditions to sustain schooling of children on basic education This is the famous conditional cash transfers, advocated by many Latin American Countries, and the Philippines, which is a Keynesian fiscal policy (an indirect form of pump-priming as in recession periods) Possible solutions: i. Child labor promotes high mortality rates in children, thus poor families would rather send them to work to realize short run returns ii. Usual poor families will not opt to educate their children even if credit is available to them a usual problem in developing countries Demographic transition Rethinking the state of the poor boys in school Ma. Ella C. Oplas Economics Department De La Salle University Manila chapter 4: population and demography 4

In the Philippines, it is the boys who are not participating equally in basic education.

5 Gender disparity has also been noted with boys at the disadvantage in most of the indicators. The gender pattern in the Philippines is different from the majority of developing countries where girls are at the disadvantage. In the Philippines, it is the boys who are not participating equally in basic education. They leave school before completing their basic education and have lower literacy and academic achievement rates. The Philippine Education for All, 2015 Review Report On enrollment The higher the grade level, the lower enrollment across all level for both boys and girls There are more boys than girls enrolled in Grades 7 There is more girls than boys enrolled in Grades 8-10 Where are the boys going? % Enrolled 4Ps child beneficiaries by grade level and by sex (Grade 7 10) Girls Boys Grade Level Malthusian trap (1798) On enrollment There is higher enrollment in Grade 11 than Grade 12 Highest enrollment is in Grade 11 There are more boys enrolled in Grade 11 while more girls are enrolled in Grade 12 This data is from K+12 Pilot Schools % Enrolled 4Ps child beneficiaries by grade level and by sex (Grade 11 12) Girls Boys Grade Level Population grows at a geometric ratio (i.e., exponential growth) Food supply increases at an arithmetic ratio (i.e., linear growth) Hence, hunger, starvation, and death shall follow Remedy is to keep population growth in check Thomas Robert Malthus ( ) Criticisms on Malthus An essay on the principle of population, as it affects the future improvement of society 1798, first edition Rapid income growth due to technological advancement Greater food production due to land-intensive technology and application of modern farm inputs Economic growth faster than population growth, resulting in the rise of per capita income over time chapter 4: population and demography 5

g., Kenya, Congo, Philippines, Colombia, Venezuela) Theory of fertility Households demand for childrenmanifests in the fertility decisionsmade by the household, considering the following factors: i.

6 Some empirical evidence Many LDCs have been able to lower population growth rate while increasing income per capita (e.g., China, Sri Lanka, Chile, Singapore) Still, there are countries with low or even negative rate of economic growth, but high rate of population growth (e.g., Kenya, Congo, Philippines, Colombia, Venezuela) Theory of fertility Households demand for childrenmanifests in the fertility decisionsmade by the household, considering the following factors: i. Cost of raising children ii. Number of children desired by the household iii. Cost of all other goods related to such demand iv. Income of the household v. Opportunity costs of child-rearing Theory of fertility In LDCs, the demand for children is high because the cost of raising children is low and they add to the family s workforce to generate income: viewing children as investment goods In DCs, the demand for children is low because the opportunity costs of child-rearing outweighs the potential income earned by the household 9especially for women): viewing children as consumption goods Theory of fertility Philippine case: strong opposition of [dominant] Catholic church on direct fertility measures (usually artificial) led to another policy mix to empower women that will result in deterrence of demand for children Chinese dilemma: one-child policy counteracted by the hidden momentum of population growth Extreme case:suppression of such demand due to high opportunity costs (e.g., Singapore, Japan) Policies to reduce fertility rates Improve female education and schooling opportunities, and economic and social role and status Provide of female non-agricultural wage employment Rise in family income Reduction in infant mortality, hence demand for replacement children Provide old-age income security Establish family planning programs chapter 4: population and demography 6

Urbanization and migration Cities of the world Urbanization and Economic causes urbanization There is a positive correlation with economic and urban population growth Favorite example of a

only is the city the densest in the world at 46,000 people per square mile,twice the density of New York City but it's located on the Ring of Fire, a series of volcanoes in the Pacific Ocean

1 children per woman, and residents face rampant disparity in living conditions.

7 Urbanization and migration Cities of the world Urbanization and Economic causes urbanization There is a positive correlation with economic and urban population growth Favorite example of a consequence : TRAFFIC in city centers Philippines invention of the word carmageddon(2015): problem shared by numerous cities in Southeast Asia (Bangkok, Jakarta, Ho Chi Minh, Kuala Lumpur) Not only is the city the densest in the world at 46,000 people per square mile,twice the density of New York City but it's located on the Ring of Fire, a series of volcanoes in the Pacific Ocean that inundates Manila with earthquakes and typhoons. On top of the environmental concerns are economic and demographic ones. Manila's fertility rate isa soaring 3.1 children per woman, and residents face rampant disparity in living conditions. High-rises are going up, as aremakeshift communities to house those who've been displaced by natural disaster or financial ruin. Chris Weller, Business Insider, 04 August 2016 City Centers of the Philippines: Baguio Dagupan Olongapo Angeles Manila Batangas Naga Iloilo Bcolod Cebu Cagayan de Oro Davao chapter 4: population and demography 7

Consequences of urbanization Increasing costs of living Increasing costs of real property (called as pecuniary externality): both positive and negative to the economy If human movement becomes

municipalities to cities More concentration of economic activity in imperial Manila (foremost design by the Spaniards) Some recent intended policy solutions: i.

8 Consequences of urbanization Increasing costs of living Increasing costs of real property (called as pecuniary externality): both positive and negative to the economy If human movement becomes uncontrollable, this results to emergence of informal settlers(if migration is internal) and later to undocumented aliens(if migration is external) Philippine urbanization Increasing conversion of municipalities to cities More concentration of economic activity in imperial Manila (foremost design by the Spaniards) Some recent intended policy solutions: i. Diffusion of economic and political power from Metro Manila to other areas of the country (from G Arroyo) ii. Change of government from unitary-presidential to federal-parliamentary (from F Ramos) Rural-urban migration On average, about 50% of urban population growth of the LDCs is due to rural-urban migration Rapid rural-urban migration has resulted in the construction of slumps and shanty towns that house a large percentage of urban population This population forms the informal sector in LDCs Philippines: the informal sector generates an estimate of 40% in total consumption of the economy, and this consumption is called cash economy Why informal? The informal sector i. Being informal means, the sector does not undergo the usual processes or laws governing everyday economic life (through formal institutions: taxation, security of work, benefits) ii. Less sophisticated platforms of transactions (e.g., on lending) iii. Less requirement on human capital investments (education and health) required to related businesses chapter 4: population and demography 8

The informal sector Advantages of investment in urban informal sector i. Contributes to economic growth ii.

Uses labor-intensive technology to create jobs The informal sector Disadvantages of investment in urban informal sector i.

Adds to pollution, congestion, and crime Women in informal sector Represent the bulk of the informal sector laborsupply; earn low wages in

e., bahay-kubo) in the Philippines (now the micro, small, and medium-scale enterprises [MSMEs]) Undesired consequence: engagement in illegal

9 The informal sector Advantages of investment in urban informal sector i. Contributes to economic growth ii. Requires small capital investment iii. Requires low cost of training and education iv. Supplies semi-skilled labor to industry v. Uses labor-intensive technology to create jobs The informal sector Disadvantages of investment in urban informal sector i. Induces rural-urban migration ii. Exerts pressure on urban infrastructure, social services (even privately-provided resources and goods) iii. Adds to pollution, congestion, and crime Women in informal sector Represent the bulk of the informal sector laborsupply; earn low wages in unstable jobs with no benefits (e.g., housekeeping) Run micro-enterprises (e.g., home-made foodstuffs and handicrafts), called cottage industries( cottage = nipahut, i.e., bahay-kubo) in the Philippines (now the micro, small, and medium-scale enterprises [MSMEs]) Undesired consequence: engagement in illegal activities (e.g., prostitution, human trafficking, and illegal drug trade) MSME profile (2014) Source: Department of Trade And Industry chapter 4: population and demography 9

Todaro s rural-urban migration model Factors affecting migration decisions: i. Expected urban income ii. Probability of finding an urban job iii.

migration model Costs of migration: i. Transportation costs and distance ii. Opportunity costs of being unemployed iii. Greater living expenses iv.

Relatives living in urban areas help to reduce living expenses Todaro s rural-urban migration model Factors inducing migration: i.

Higher potential incomes (but not being able to factor costs of living especially in the very short run) Example: Palawan sanctuary Awarded as one of the new

10 Todaro s rural-urban migration model Factors affecting migration decisions: i. Expected urban income ii. Probability of finding an urban job iii. Cost of living in urban areas Decision criterion: migration will take place if the present value of expected benefits exceed costs Todaro s rural-urban migration model Costs of migration: i. Transportation costs and distance ii. Opportunity costs of being unemployed iii. Greater living expenses iv. Psychic costs of being away from home and family v. Relatives living in urban areas help to reduce living expenses Todaro s rural-urban migration model Factors inducing migration: i. Information flow about job openings in the informal sector ii. City lights: movie theaters, restaurants, amusement parks, etcetera iii. Higher potential incomes (but not being able to factor costs of living especially in the very short run) Example: Palawan sanctuary Awarded as one of the new seven wonders of nature (2011) Current struggle to prevent the proposals to pursue mining explorations: both affecting the environment, and the ancestral domains Campaign in 2011 led to the untimely demise of radio broadcaster and environmentalist Dr Gerry Ortega, which sparked outrage among locals and netizens chapter 4: population and demography 10

Example: the Cordillera dilemma Rural-urban brain drain :

agriculture (also has consequences on food security in the

waterdown of traditional farming to modern city living Implicit

Climate change: problems of maintaining the terraces Bakit ba

11 Example: the Cordillera dilemma Rural-urban brain drain : younger generations are not willing to continue tradition of agriculture (also has consequences on food security in the region) Influences of modernization: cultural heritage waterdown of traditional farming to modern city living Implicit consequences on oral tradition and heritage preservation Climate change: problems of maintaining the terraces Bakit ba kayong mga mapeperang mga babae, ang hilig n'yong hinahanap ang sarili n'yo sa Baguio? Ba't ba Baguio? Hindi ba pwedeng sa inuman na lang? end of chapter 4 contemporary national chapter 4: population and demography 11

Urbanization and Rural-Urban Migration: Theory and Policy

Urbanization and Rural-Urban Migration: Theory and Policy In this unit we would: 1.1 Examine the potential role of cities both modern sector and urban informal sector-in fostering economic development