Births Deaths and Economic Growth Economic Forces in
Births, Deaths and Economic Growth Economic Forces in American History
Greg Clark, Farewell to Alms Economic Forces in American History
But what about Malthus? What was happening to world population? Economic in American History Source: Forces R. W. Fogel, “Catching Up with the Economy, ” AER (1999)
U. S. Economic Growth: Some Basic Facts Extensive Economic Growth: – An increase in the size of the economy – GDP = the sum of prices times quantities – GDP = ∑P*Q Intensive Economic Growth: – An increase in output per capita – Per Capita GDP = GDP/Population We are mostly concerned with intensive economic growth when we try to explain the development of societies. Economic Forces in American History
U. S. Economic Growth: Some Basic Facts In extensive (GNP, GDP) terms, quite remarkable over the long run. In intensive terms (per capita), not remarkable, but duration is extraordinary. America was the “long distance runner. ” Quickening in the pace of intensive growth c. 1950. Level of income per capita c. 1800 was quite high by standards of the day. “Explaining” economic growth: How far can one go with the inputs? Not very far. Technology, human capital, institutions appear to be far more important. Economic Forces in American History
Economic Forces in American History
Per Capita Year 1989 Income Dollars 2013 Dollars 1710 45 550 1030 1775 60 750 1410 1840 109 1350 2533 1880 205 2650 4972 1929 847 6150 11540 1945 1515 10450 19608 1960 2788 11100 20828 1990 22099 20950 39310 2013 53143 28322 53143 Economic Forces in American History
The Very Long Run Gallman Economic Forces in American History Kuznets/ Romer US Dept of Commerce
The Very Long Run in Comparative Perspective GDP/capita, log scale Economic Forces in American History
The Long Run 3. 3% average annually Economic Forces in American History
1. 9% 1. 5% Economic Forces in American History
Growth Accounting Economists have devised several ways to account for the sources of growth. In the simplest terms, how much of the income growth (total or per capita) can be explained by: Technology Land Labor Capital Economic Forces in American History
Growth Accounting Variable Growth Accounting by Gallman (L = workers) Denison (L = hours) Percentage of Total Rates of Change 1840 -1900 -1960 1929 -1982 α=0. 67, β=0. 28, γ=0. 05 (est. ) 1. Output/Labor 100% 1. 48% 2. Capital/Labor 41% 16% 0. 30/β = 1. 07 3. Land/Labor 2% -1% -0. 05/γ = -1. 00 4. Technology 57% 86% 1. 23 (83%) 5. Education 6% 22% 27% (education) (12% ↓ other L factors) 6. Tech - Ed 51% 64% 1. 01 (68%) Economic Forces in American History
Growth Accounting Variable Growth Accounting by Gallman (L = workers) Denison (L = hours) Percentage of Total Rates of Change 1840 -1900 -1960 1929 -1982 1. Output/Labor 100% 1. 48% (100%) 2. Capital/Labor 41% 16% . 30 (20%) 3. Land/Labor 2% -1. 00 (-3%) 4. Technology 57% 86% 1. 23 (83%) 5. Education 6% 22% 27% (education) 6. A'* (approx. ) 51% 64% 1. 01 (68%) Economic Forces in American History
Physical Technology and Institutions In the previous slides, technology represents our ignorance, what we can’t measure. There are two kinds of technological change that lead to more productive economies: Physical Technology Institutions Economic Forces in American History
So in rough terms, economic growth is a function of Land Labor (bodies and human capital) Capital (physical and financial) Physical Technology Institutions (social technology) Each of the next four lectures will be about these aspects of American economic growth. Economic Forces in American History
Relationship between Economic Growth and Population Growth The growth of output per capita is equal to the growth of output minus population growth 1790 -1840 -1910 Per Capita Growth Output Growth 1. 00% 1. 25% 4. 00% 3. 75% Population Growth 3. 00% 2. 50% So, population’s role in or share of economic growth has been declining over time. Economic Forces in American History
Economic Forces in American History
Some population figures: 1700 - 250, 000 1776 – 2. 5 million 1860 – 31 million 1914 – 100 million 2010– 310 million How do we explain the trends? Economic Forces in American History
Fertility and Mortality Births: Earlier marriage in US than Europe in the 18 th & 19 th centuries – higher fertility 1800 1000 1870 1915 2010 birth rate near the natural limit - 60 per birth rate 40 per 1000 birth rate 30 per 1000 birth rate 14 per 1000 Economic Forces in American History
Over time the birth rates have come down. Why? 1) Urbanization increased with the closing of frontier, less cheap land – Children less valuable in production – Evidence: post civil war - Children were a net asset in the mid west. Children in the frontier were a liability to age 6 but a net contributor by about 10. Children in the northeast were a net liability to 13. – In rural areas children becoming less valuable in production – mechanization Economic Forces in American History
Over time the birth rates have come down. Why? 2) Infant mortality way down – Normally do not have a second child while the first is nursing. Delay between children increases with survival of a child – Target family size – if remained constant need fewer births 3) Later marriage from the late 19 th century 4) Increasing divorce in the 20 th century 5) Better contraception from the 20 th century, especially after the 1970 s Economic Forces in American History
Death Rates: Increase in Mortality 1820 to 1870 and then Decline Increase in urban population – worse nutrition and disease environment Decline in Death Rates after 1870 – 1850 – life expectation for males; 41 – 1915 – life expectation for males; 53 – 2010 – life expectation for males; 76 – 2010 – life expectation for females; 81 – 1870 – Death Rate 23 per 1000 – 1915 – Death Rate 15 per 1000 – 2010 – Death Rate 8 per 1000 Economic Forces in American History
What killed folks early on? Infectious Diseases Later: heart disease and old age (pneumonia) Today: add cancer Economic Forces in American History
Determinants of health: 1) genetic changes in virulence of disease organisms perhaps accounts for 5% of decline – scarlet fever and diphtheria 2) improved medical practice: only in 20 th century with antibiotics and improved knowledge Economic Forces in American History
Determinants of health: 3) Improved nutrition and overall level of living – market influences – Improved urban conditions – sewerage (reduced epidemics ex: typhoid), heating, less crowding, better transport (fresh foods), replacement of horses with motorized transport – Improved rural conditions – mostly nutrition due to income and lower transportation (refrigerated rail cars) 4 Public health and regulation – Urban – late 19 th Century better knowledge of disease transmission Economic Forces in American History
Filtration of water dramatically affected deaths from Typhoid City Avg Death Rates %Fall in Mortality Before Filtration After Filtration (per 100, 000) Albany 109 28 Cinncinnati 56 11 Indianapolis 46 28 New Orleans 39 26 Pittsburgh 132 19 Washington D. C. 55 31 Weighted Avg 60 21 Remaining Problem: lead pipes Economic Forces in American History 74% 80% 39% 33% 85% 43% 65%
Growth in the Long Run One of the key pieces of American history and particularly of American economic history, has been the long and steady rate of per capita economic growth. It has average around 1. 5% per year since 1840, the first year for which we have reliable data. Economic Forces in American History
Economic Forces in American History
The short and long run Although there have been fluctuations in the rate of economic growth, there have been very few serious “downs, ” with the exception of the Great Depression, particularly 1929 -1933 (which we will talk about). The great recession of 2008 -2009 is not, in historical perspective, an exceptional event. Economic Forces in American History
Over the long run, the American economy has been spectacularly successful. It is not successful because it grows fast It is successful because it continues to grow and rarely shrinks. In the long run, the picture is both optimistic and as rosy today as it has been for the last century and more. Economic Forces in American History
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