The Demographic Revolution

1. The Demographic Revolution • Around 1750, population in all of Europe began to grow rather quickly, attaining rates it had never achieved before. • Moreover, the rates of growth, unlike previous periods, were not short-lived spurts but sustained and long-term growth. Fudan University Lecture 5

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3. This continues into the later nineteenth century • By 1900, the population of England was about 32 million. • By that time the CDR had fallen to about 17 per 1000 and the CBR to about 28 per 1000. Fudan University Lecture 5

4. Given that the Industrial Revolution and the Demographic transition began at the same time, could this be a coincidence? A number of logical possibilities: • The Industrial Revolution “caused” the demographic transition • Population growth triggered the Industrial Revolution. • They caused each other • Both were caused by a “third factor.” Fudan University Lecture 5

5. Answers: • None of these are entirely false or true. • We must understand that population growth is very complex and consists of a confluence of different phenomena that follow different rules. • All the same, both were indirectly affected by the growth of “useful knowledge” and thus by the Enlightenment. Fudan University Lecture 5

6. The least likely is the argument that one caused the other. • In the first 60 years, the Industrial Revolution only affected a relatively small portion of the British economy, and income per capita did not start to rise before 1830, so the Industrial Revolution was unlikely to affect demographic behavior of the nation as a whole. • Population growth occurred also in economies where there was no Industrial Revolution such as Ireland and the Netherlands. Fudan University Lecture 5

7. But it is even less likely that population growth “caused” the Industrial Revolution: • Seems the timing is off: little population growth before 1750. • But what about the economics? Is there a model that connects population growth to technological progress? Fudan University Lecture 5

8. Lin (1995) has proposed that technological change could be related to population size if the sources of innovation were predominantly experience-based, that is to say, new technology emerged as a by-product of the production of goods and were thus first and foremost a function of numbers and size. Fudan University Lecture 5

9. After the Industrial Enlightenment, when the process of invention started to depend less on experience and more on useful knowledge gathered through observation, experimentation, and theory, size began to matter less. By the eighteenth century this transition was well on its way, and by the middle of the nineteenth century the sheer population size of each economy began to matter less and less at exactly the time when technological change was accelerating. Fudan University Lecture 5

10. Population change • Some basic and obvious notions: • All change in population is due by definition to births-deaths+net immigration • Population change is central to economic history because: • All these three variables are functions of economic variables. • Economic development itself is a function of population change but the relationship is very complex. Fudan University Lecture 5

11. The Great Change is known as the “Demographic Transition” • It boils down to this: • In “traditional Europe” population grew very slowly or not at all (and at times declined dramatically), known as a “high pressure demographic equilibrium.” • Both birth rates and death rates were extremely high by modern standards: Birth rates were about 42 per 1000, Death rates 40-50 per 1000. • How much is it today? • In the US CBR = 14.2; CDR = 8.3; In Germany, CBR = 8.2, CDR = 10.8; in UK: CBR = 10.6, CDR = 10. 05; in France CBR = 12.7, CDR = 8.5. Fudan University Lecture 5

12. A Malthusian World: High Pressure demographic regime: • Life expectancy was very low: 30-35 at birth. • Infant mortality very high: 200-250 per 1000 live births plus another 50-100 between 1-5. • [Infant mortality today? In Germany 4 per 1000 live births. In US about 6.3. In China: about 20 per 1000.] • Birth rate still controlled by marriage age. • Biological quality of life was very low by modern standards: • People were sick a lot and no real treatment for disease • People were short and skinny, bad skins and bad teeth. • Lots of handicapped and invalids. • Reproductive span quite short. Fudan University Lecture 5

13. Modern World: Low Pressure demographic regime • Low birth and death rates • High life expectancy, negligible IMR • Marriage rate and age no longer relevant to fertility • High biological quality of life. • High survival rates among “weak” children. Fudan University Lecture 5

14. British Demographic experience, 1600-2000 Births High-pressure regime Deaths Low-pressure regime 1700 1800 1900 Fudan University Lecture 5

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16. So there is a lot to explain. • Standard Model explaining pre-modern demography: Malthusian model. • Simple assumptions: Fudan University Lecture 5

17. This defines the simple Malthusian model • Population equilibrium is regulated by two “checks” • Preventive check (population is kept in check by falling birth rates) --- delayed marriage or contraception • Positive check (population is kept in check by rising death rates --- wars, famines, diseases. • This model has some unusual properties. • Iron law of wages. • The worse it gets, the better it gets (“Lenin’s Law”) Fudan University Lecture 5

18. Iron Law: f’(L) = w f’(L) = w E’ W* E* E” D w’ B w L B,D L* Fudan University Lecture 5

19. Lenin’s Law: f’(L) = w f’(L) = w E’ W* D’ E D B w L B,D L* Fudan University Lecture 5

20. European Demographic Regime • Widely believed to be a “preventive check” in Western Europe. • Preventive check usually works through family planning and contraception. • Yet Europeans used a different system: delayed marriage. This kept populations a bit lower and therefore living standards a bit higher than otherwise. Fudan University Lecture 5

21. It used to be believed that this was the key to Europe’s higher living standards • More modern research shows that Asian societies, too, practiced some kind of fertility control through infanticide. Fudan University Lecture 5

22. This Malthusian regime began to break apart in the 18th century • Mortality rates started to fall (everywhere in Europe) • Fertility rates started to rise (not everywhere in Europe) • Eventually fertility started to decline. • In the 20th Century fertility declined faster than mortality. Hence the modern “low pressure equilibrium”. Fudan University Lecture 5

23. Can we squeeze these developments in a Malthusian model? • We need to incorporate the fact that when people’s income goes up, they decide to have fewer children. • At the same time, there was clearly technological change that reduced the incidence of disease. • Perhaps an equilibrium model would look like this. Fudan University Lecture 5

24. Birth and Death Rates Malthusian Equilibrium E F D B E’ D’ Modern Equilibrium Fudan University Lecture 5 Income per capita

25. More likely: both D and B curves have shifted Birth and Death Rates Malthusian Equilibrium E F D E’ B D’ B’ Modern Equilibrium Fudan University Lecture 5 Income per capita

26. To make any progress, we will need to deal with fertility and mortality separately, since they are subject to quite different forces. • Will leave out emigration, although it is of considerable importance, especially for Ireland. Fudan University Lecture 5

27. What determined fertility? • British fertility started to rise in about 1750, and reaches a peak around 1825. It then starts to decline, but this decline is very slow until about 1900. Fudan University Lecture 5

28. Crude Birth Rates, 1741-1911 Fudan University Lecture 5

29. Can we understand this phenomenon? • The important differences in fertility behavior between traditional and modern British society were: • In traditional society: • Marriage used to be the main regulator of fertility. • There was not much effective fertility control, although fecundity may have been lower (why?). • Starting a family was, however, largely an economic decision. • Children played an important economic role as sources of family-labor and insurance. Fudan University Lecture 5

30. In the mid eighteenth century marriage rates went up • This is often associated with the increase in opportunities through domestic (cottage) industries and increase in service employment. European marriage rates had been traditionally “low”, people married relatively late (women at ages 22-23). After 1750 that age declines by 1.5-2 years. • This increase led to a rise in fertility that lasted till about 1830. Then it starts to decline to its mid-eighteenth century levels till about 1880, then it starts to decline again. • At that point the connection between the marriage age and fertility starts to break down. Fudan University Lecture 5

31. It becomes obvious that as income goes up, people want to have fewer children. But WHY? • A simple explanation is the improvement and diffusion of contraceptive technology. This is the “useful knowledge argument” since contraceptive knowledge is (very) useful (and complex) indeed. • A related (but alternative) argument is secularization. • A “mechanical” argument is that infant mortality fell. • But were there economic causes that cause the “demand” for children to fall in the modern age? Fudan University Lecture 5

32. Part of the story must be that the “derived demand” for children fell. • In other words, people had children in part (a) because they derived direct utility from them, and in part (b) because children were an input to other goods that they wanted. • As to(b), the net value (costs – benefits) of children declined: • Child Labor laws reduced the opportunities for employment • Compulsory education made it even more unlikely • As the returns to human capital increased, it became less and less attractive to not spend money on education (since parents cared about their children’s economic success) • With the decline in the number of family-firms, it was less necessary to find reliable and loyal labor. • Social insurance slowly eliminated the need to rely on children for old age, sickness, and unemployment insurance. Fudan University Lecture 5

33. How about the relative price of children? • Many of the goods that children need are services, whose relative prices have gone up. • But at the same time many of those services are subsidized or fully paid for by the state (health, education). • One possibility: the average cost of children did not rise much, but the marginal costs rose sharply (through “sibling effects.”) Fudan University Lecture 5

34. What about the opportunity costs of women? • This is a valid explanation for the modern period (twentieth century) but not for the nineteenth century because more and more married women withdrew from the formal labor markets and became full-time housewives. • The identification problem here is especially difficult: does formal work by married women affect fertility behavior or is it the other way around? Fudan University Lecture 5

35. Modern economists like the q-q tradeoff story. • The idea is straightforward: instead of having a large number of children, people spend on “high quality” children. This means that the rearing costs are concentrated on a small number of children who are well-supplied and educated. • This is consistent with the change in the direct-utility-based demand for children, as companions or social signaling devices. Fudan University Lecture 5

36. Why invest in “high-quality” children? • If you care about them, you care about their income, but income requires human capital. • Educated children may give parents more utility. • By treating them well, you hope to create affection and loyalty. • Having successful children reflects well on you (?) Fudan University Lecture 5

37. Then why have so few? • Standard answer (Becker): money is not the only constraint, time is too. • Children require a lot of time. • Time has become more valuable as wages rise. [Many problems with this approach]. Fudan University Lecture 5

38. Mortality decline • This is a very different issue, since death is rarely “an economic decision variable.” • But it is profoundly technological in nature, because the struggle against nature is especially fierce in combating disease. Hence useful knowledge was especially crucial. • The diseases that killed people before the modern age were very different than today’s. They were primarily infectious diseases. But one by one they began to disappear. Fudan University Lecture 5

39. Hence, to understand mortality, we need to know more about these individual diseases and why they disappeared • The one striking fact is that some of the most virulent ones disappeared long before they were fully understood. • E.g. Bubonic Plague. • Smallpox • Cholera Yet these diseases are possibly less important demographically than less spectacular diseases such as pneumonia, influenza, and diarrhea. Especially lethal was TB, a killed of young adults. Fudan University Lecture 5

40. Crude Mortality rates, 1731-1901 Fudan University Lecture 5

41. Infectious diseases were transmitted through: • Air borne diseases (pneumonia, influenzas, TB, smallpox) • Food- and water borne diseases (typhoid, cholera, misc. forms of enteritis and dysentery) • Vector (insect-) borne diseases such as typhus, malaria, yellow fever. Fudan University Lecture 5

42. The sources of mortality decline • First: not everything worked in this direction. The growth of cities increased mortality by a significant amount because of the “urban penalty.” • Advances in medical science: some rather remarkable advances, but all of an empirical and serendipitous nature, not yet based on a deep understanding of the etiology of disease. Distinguish between clinical and preventive medicine. • What makes this analysis is that diseases affected one another, suffering from one would make you more vulnerable to others. Fudan University Lecture 5

43. A Medical Enlightenment? • The spirit of improvement permeated every industry and every service, and health was no exception. Medicine was, in a very precise sense, “philosophy at work,” as the great historian of the Enlightenment Peter Gay put it. • The seminal figure here by all accounts was the great medic Thomas Sydenham (1624–89), an admirer of Bacon’s and friend of Locke’s, who firmly supported the Baconian idea of collecting systematic data on diseases to buttress his view that specific medications cured specific diseases. Fudan University Lecture 5

44. Major insight: • Even if the underlying mechanism was not really within grasp, useful knowledge could be extracted and perhaps exploited by looking for empirical regularities and patterns, either by experimentation or by collecting datasets. • Examples: • James Lind and scurvy • Lady Montague and the smallpox inoculation experiment • Edward Jenner and the invention of vaccination • The consumption of cod liver to prevent rickets • The use of cinchona bark (Quinine) to fend off malaria • Preventive medicine (cleaning, cooking etc.) Fudan University Lecture 5

45. An Enlightenment story: smallpox • Lady Mary Montagu, the wife of the British Envoy in Constantinople and an enlightened and educated woman, observed its use for this purpose and made it her mission to introduce it into England, despite considerable doubts and resistance. • Many clergymen felt that diseases were sent to mankind for the trial of their faith or punishment for their sins and that without them vice and iniquity would rule. By grabbing the right to interfere in diseases, he felt, inoculators “usurped an authority founded neither in the Laws of Nature nor of Religion” Fudan University Lecture 5

46. Lady Mary Montagu(1689-1762) Fudan University Lecture 5

47. Inoculation • Smallpox inoculation was a procedure by which patients were deliberately infected with smallpox by scratching their skin with infected pus, but in sufficiently small quantities to allow them in the majority of cases to recover quickly and without scarring. The procedure was introduced in the early 1720s. • At first, British inoculators made incisions deeper than necessary, thus actually increasing the chance of contracting the disease. Modified inoculation, with much smaller incisions and using pus from a smallpox pustule at an early stage of development, was introduced in 1762 by Robert Sutton, a Suffolk country doctor (Hopkins, 1983, p. 88). With the Suttonian method, inoculation became less risky. Fudan University Lecture 5

48. Yet the great breakthrough occurred with vaccination • One of the truly great inventions of history. • Classic macroinvention: but needed microinventions to improve it. • Major demographic impact --- smallpox led to other diseases. Fudan University Lecture 5

49. Edward Jenner, 1749-1823 Fudan University Lecture 5

50. Yet there was a lot of frustration: Fudan University Lecture 5