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Demographic Trends, Economic Growth and Distribution Dynamics

  • 2007-2011
  • Project
Bussolo, Maurizio, World Bank

Study: “Demographic Trends, Economic Growth and Distribution Dynamics”
PI(s): Bussolo, Maurizio
Co-PI(s): De Hoyos Navarro, Rafael E.; Medvedev, Denis; van der Mensbrugghe, Dominique; Horowitz, David S.
Affiliation(s): World Bank
Project Dates:
Start: 2007
End: 2011
Data Source(s): Household Survey Data
Methods: Global Income Distribution Dynamics (GIDD) Model
Geographic Location(s): Cross-Country Analysis

Description:
Fertility decline in much of the developing world has led to changes in dependency ratios, the size of labor force and spending and savings behavior. This has been called a “demographic dividend”, as workers become a larger share of the population and the scope for savings and per-capita income growth is boosted. When these larger cohorts of young people reach old age, this trend is expected to reverse.

This study analyzes the economic impacts of a delayed or a quickened decline in fertility rates in developing countries. Specifically, the study tests three hypotheses: delay of the decline in fertility rates during the next two decades will:

  • Increase income inequality and slow poverty reduction;
  • Slow the increase in urbanization rates;
  • Strain education systems, making Millennium Development Goals more difficult to achieve
This study uses a combination of macro models (economy-wide general equilibrium models) and micro models (based on household survey data). The main methodological contribution of the study is the development of methods that make the macro and micro approaches more mutually consistent, which is a still under-researched area. The research benefits from a global general equilibrium model (distinguishing some 80 countries or region and some 40 sectors) and a global database with household surveys of 95 developing countries, both of which were developed at the World Bank and applied in recent work carried out by the Development Prospects Group in the Bank.

Research Outputs:

Bussolo, Maurizio, De Hoyos, Rafael & Medvedev, Denis. (2008). Is the Developing World Catching Up? Global Convergence and National Rising Dispersion (World Bank Policy Research Working Paper No. 4733).

Bussolo, Maurizio, De Hoyos, Rafael & Medvedev, Denis. (2010). Economic Growth and Income Distribution: Linking Macroeconomic Models with Household Survey Data at the Global Level. International Journal of Microsimulation, 3(1): 92-103.

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