Facebook Blogging

Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.

Friday, December 02, 2005

Gunnar Myrdal and the 'Population Problem'

I discovered the work on demography and economics of Swedish Nobel Prizewinner Gunnar Myrdal when I read this paper by Bo Malmberg,Thomas Lindh and Joakim Palme. In that paper they draw attention to the way in which Myrdal was an early pioneer stressing the importance of demographic influences for economic theory, and in particular of how declining population might exert a negative influence on economic performance.

In this sense he was truly a visionary, exploring more than 60 years ago many of the ideas of which I and others have only recently begun to think about (in fact reading Myrdal's lectures I am amazed at how he seems to have gotten through to thinking about just the same issues - like ageing and productivity - which are worrying me right now).

In fact Myrdal seems to have:

1/ Had a major role role in the history of the debate about race relations in the US
2/ With his wife Alva (the mother of modern feminism?) pushed for a series of gender and child friendly policies in Sweden which seem to have given a lot of impetus to the so called 'Swedish model'.
3/ Been the first modern economist to raise the issue that the neo-Malthusians had it wrong about population (in this case the neo-Malthusian Knut Wicksell) and that number wasn't the important issue, but that structure and momentum were.

Myrdal made his population 'discoveries'in the 1930s for the purely conjunctural reason that Sweden was then already suffering from low fertility. As he points out, this was partly a 'structural shock' produced by economic recession and out-migration. But Sweden did have a very early move to the second phase of the demographic transition (the one were birth rates fall below replacement). Sweden's population dynamic has in fact held up fairly well over the last 60 odd years, partly due to inward migration and partly due to child friendly policies. But the long run tendency is making itself felt even in Sweden now.

I have posted the economically relevant Godkin lecture on my website. As a taster, here is a short extract:

Curiously enough, in this neoclassical speculation on population the factor of age distribution was for a long time not studied, and it was never studied intensively as to its economic implications. It is remarkable, because this factor could to a large extent be taken care of in a stationary model of theory. When a certain trend of the population development is maintained for such a long period that a stable age distribution has been reached, the difference between a progressive, a stationary, and a regressive population -- apart from a different development of population numbers -- is that in the first more than in the second, and in the second more than in the third, the number of children is relatively large and the number of old people relatively small. A corresponding difference rules even within each major age group taken by itself. If we thus compare a regressive population with a stationary one, we find that in the first young children are relatively fewer than older ones and that the center of gravity is also higher in middle age as well as in old age.

Now people in different ages are productive in different degrees, and -- within a given standard of living -- their consumptive demands, their cost of living, also differ. Here intensive empirical studies ought to set in, and they are now being made in Sweden, to ascertain the average productivity and the cost of living in different age groups. These calculations give somewhat different results in different social classes. The occupational and cultural changes also alter the quantities from time to time very considerably.

I cannot in this short synopsis enter upon the details of how such realistic studies of agedifferential productivity and cost of living are to be planned and carried out. One very broad generalization must suffice. If, by combining productivity and cost of living into a net productivity, we try to get a general index for the contribution or noncontribution of various age groups, we get, of course, the general picture that normally a person during two periods of his life, the beginning and the end, consumes without producing, while during a period between he produces more than he actually consumes. The influence of its age structure on the average level of living of a nation will then be determined by the relation between the "overproducing" and the "overconsuming" age groups.

continue reading #