Population and economic growth in developed countries

ABSTRACT

The relationship between population growth and economic growth is examined. Evidence is provided on the direction of causality between population and GDP in five industrialized countries (US, UK, Germany, France, and Italy) for the periods 1820–1938 and 1950–2016. Using Toda-Yamamoto Granger causality tests and Sims causality test it was found that the direction of causality during the former period was from Population to GDP or bidirectional while for the latter period, it was from GDP to population. It is also shown that during the second period per capita GDP was almost double relative to the first period. We argue that the difference may be partly explained by the direction of causality between the two variables. In the 1820–1938 period, the direction of causality is probably due to the large family model that prevailed in that period that led to rapid population growth. For the 1950–2016 period it is probably the rapid economic growth that followed the Second World War and motivated large migration flows to the developed countries we examined.

KEYWORDS:

• Population growth
• GDP growth
• economic growth
• causality analysis

JEL CLASSIFICATION:

• N1
• J11

Availability of data and materials

The data used in this study are taken from the Maddison Project Database (2018), which is a freely available database.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1. Another line of research of the effects of population growth examines its impact on the environment and the conditions for sustainability, see e.g. Alcott (2012), Lianos and Pseiridis (2016).

2. A labour market diagram will show that these effects depend on the elasticity of demand for labour in the first case and of the supply of labour in the second.

3. The estimated coefficients from the VAR model are available upon request by the authors.

4. Εxcept for France and Great Britain, where no causality is found for the second period.

Additional information

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.