The relationship between population growth and economic growth is controversial. This article draws on historical data to chart the links between population growth, growth in per capita output, and overall economic growth over the past 200 years. Low population growth in high-income countries is likely to create social and economic problems while high population growth in low-income countries may slow their development. International migration could help to adjust these imbalances but is opposed by many. Drawing on economic analyses of inequality, it appears that lower population growth and limited migration may contribute to increased national and global economic inequality.

Introduction The relationship between population growth and growth of economic output has been studied extensively (Heady & Hodge, 2009). Many analysts believe that economic growth in high-income countries is likely to be relatively slow in coming years in part because population growth in these countries is predicted to slow considerably (Baker, Delong, & Krugman, 2005). Others argue that population growth has been and will continue to be problematic as more people inevitably use more of the finite resources available on earth, thereby reducing long-term potential growth (Linden, 2017). Population growth affects many phenomena such as the age structure of a country’s population, international migration, economic inequality, and the size of a country’s work force. These factors both affect and are affected by overall economic growth. The purpose of this article is to use long-term historical data and a review of both theoretical and empirical work on the relationship among growth of population, total output and per capita output to assess the implications of their evolution for economic inequality, international migration policies, and general economic growth. In his important book on inequality, Thomas Piketty (2014) observes that economic growth “ . . . always includes a purely demographic component and a purely economic component, and only the latter allows for an improvement in the standard of living” (p. 72). Economic growth is measured by changes in a country’s Gross Domestic Product (GDP) which can be decomposed into its population and economic elements by writing it as population times per capita GDP. Expressed as percentage changes, economic growth is equal to population growth plus growth in per capita GDP. GDP is a measure of economic output and is also an indicator of national income which can be defined as total output net of capital depreciation plus net income from sources outside the country (Piketty, 2014, p. 45). Piketty (2014, p. 73) points to evidence that average annual world economic growth between 1700 and 2012 was 1.6% made up of equal parts population growth and per capita output growth of 0.8% each. While these growth rates may appear to be very small, they can lead to impressive increases over long periods of time. Population growth at an average annual rate of 0.8% over the period 1700 to 2015 resulted in a 12-fold increase in world population from about 600 million in 1700 to over 7.3 billion in 2015 (Maddison, 2001 and World Bank, 2017). Piketty (2014) develops a number of economic relationships to describe the workings of a capitalist economic system and traces the implications of these relationships for changes in economic inequality. The relationship between economic growth and the rate of return to capital is of central importance in his analysis. He argues that when the rate of return to capital is greater than the economic growth rate (r > g in his notation), the likely result will be concentration in the ownership of capital leading to increasing inequality. In a later article, Piketty (2015) clarifies this result noting that other factors as well as economic policies contribute importantly to the evolution of economic inequality, suggesting that large gaps between r and g will tend to amplify the effects of these other factors. This qualification does not diminish the importance of economic growth in Piketty’s analysis of the causes and consequences of rising inequality. He argues that economic growth is likely to be relatively slow in the future, less than the rate of return on capital, in part because its demographic component is expected to grow very little. Baker et al. (2005) agree noting that slowing population growth in the United States is part of the reason that future U.S. economic growth will be lower than it was for most of the 20th century. Population growth is falling in many parts of the world and once the demographic transition is completed in sub-Saharan Africa and other areas of robust population growth, world population growth will probably return to historic levels of less than 1% per year. Average annual growth in per capita output has also been fairly modest over the past 200 years accelerating during periods when very poor countries begin to catch up with more highly developed economies or when rapid productivity growth is achieved as was the case in many countries during the 20th century. The danger of slow economic growth in Piketty’s view is that the resulting concentration of capital will help to bring back the patrimonial capitalism of the 19th century when one’s fortune was more effectively made by marrying an heir to great wealth than by working to develop one’s talents in the service of a productive career. Piketty’s explanation of the importance of economic growth is not the only possible account, of course. Economic growth is important for raising living standards around the world and the role of population growth in the evolution of living standards is a significant policy issue (see Heady & Hodge, 2009). In addition to the potential effects of population growth on economic inequality, population and economic growth have significant impacts on such controversial topics as international migration and global resource use. In the following sections of the article, the relationships between population and economic growth are analyzed to assess the implications of their likely evolution for growing inequality around the world and for population and migration policies. There is an extensive literature on these relationships but little consensus on the actual effects of population on economic growth (Heady & Hodge, 2009). Some authors offer theoretical arguments and empirical evidence to show that robust population growth enhances economic growth while others find evidence to support the opposite conclusion. Still others find that the effects vary with the level of a country’s development, the source or nature of the population growth, or other factors that lead to nonuniform impacts. Heady and Hodge (2009) point to wide variation in empirical analyses of the link between population growth and growth in per capita income due to different methods, control variables, and other factors. In the next section, statistical evidence on the long-term evolution of population, per capita output, and the total economic product for various regions and selected countries is laid out. This is followed by a review of the theoretical and empirical analyses of the role of population in economic growth and a discussion of the impacts of productivity increases and international migration on economic growth. The final section summarizes the evidence on the effects of population growth on economic growth and examines the predictions that long-term economic growth will be low as countries around the world complete the demographic transition and the potential for high economic growth from low-income countries catching up with countries with more advanced technological capabilities is exhausted.

Conclusion Most of the work reviewed in this article supports the idea that population growth is an important factor in overall economic growth and may even contribute to increased growth in per capita output in some cases. In low-income countries, rapid population growth is likely to be detrimental in the short and medium term because it leads to large numbers of dependent children. In the longer run, there is likely to be a demographic dividend in these countries as these young people become productive adults. It has also been argued that population growth induced by high levels of fertility, as is often the case in low-income countries, can reduce general well-being in contrast to growth resulting from declines in mortality rates generally believed to have more benign impacts on savings and economic growth. In high-income countries, population growth is low and in some cases negative giving rise to age structures with a high proportion of elderly people in the population. The burden of supporting a large number of retired people could be eased if population growth were higher in these countries but it does not appear likely that fertility rates will increase in the future or that mortality rates will fall much below current levels. As a result, the natural population growth rate is likely to be very low. The U.S. Census Bureau (2017) predicts that annual natural population growth in high-income countries will be −0.3% by 2050. Increased migration from low- to high-income countries could offset these low and negative natural population growth rates while alleviating some of the pressures of high population growth in low-income countries. Although not directly affected by migration, an additional advantage of higher population growth in high-income countries is that it reduces the effects of inherited wealth on economic inequality (Piketty, 2014, p. 83). Higher population growth is generally associated with larger families and large families will have to divide inheritances among more children. Inherited wealth is an important part of the concentration of capital which, Piketty (2014) shows, contributes to greater economic inequality. There are still many who take exception to conclusions such as these, arguing that the world is currently overpopulated putting unsustainable strains on resources and the environment. The president of “Negative Population Growth, Inc.” argues that policies to reduce the world’s population are crucial in realizing a human population that can be sustained indefinitely (Mann, 2015). Most of those who believe the world is overpopulated focus on the potential exhaustion of vital resources such as farmland, water, and raw materials. The implicit assumption in these analyses is that future technological innovations will be unable to overcome resource scarcities created by the needs of the growing population without causing environmental damage. In the case of natural resources, it is expected that technological innovations will be directed toward creating substitutes as the resources become scarce and their prices rise. In other words, rising prices for petroleum and other natural resources are likely to stimulate innovations that will solve many of the problems generated by the increasing scarcity that will lead to the rising prices. In the case of fossil fuels, many would agree that increasing the costs associated with their use either as a result of scarcities or through taxation or other price-enhancing policies would have significant benefits in reducing the greenhouse gas emissions that contribute to climate change. There may be limits to the ability of market forces and technology to overcome potential resource constraints or to protect such environmental goods as clean air and water but it would be wrong to think that human ingenuity is completely impotent when it comes to creating a sustainable environmental future without severe population reductions. This is good as dramatic reductions in the size of the global population are highly unlikely short of widespread nuclear conflict or unusually deadly disease outbreaks. Recent technological innovations in food and agricultural production offer an encouraging example. Conservation practices such as no-till farming which can reduce soil erosion and chemical runoff, precision farming which allows more exact applications of chemical fertilizers and pesticides reducing the quantities required, and other environmentally benign management practices have been widely adopted around the world without significant sacrifices in total food production or farm incomes (Derpsch, Friedrich, Kassam, & Hongwen, 2010; Thakur, Kassam, Stoop, & Uphoff, 2016; U.S. Department of Agriculture, 2016). Even such widely decried technological innovations as those created by genetic engineering can give rise to crop varieties that require fewer chemical inputs and reduce the impact of agriculture on the environment (Hamilton, 2009). It is almost certain that world population will reach 10 billion over the next 50 years and as these people will have higher incomes on average than is the case today, food demand is expected to increase dramatically. Meeting this increased demand without causing irreversible damage to the environment may be challenging but the rapid adoption of more sustainable agricultural practices currently under way suggests that this is not an insurmountable task. Mann (2015) also calls for greater limitations on immigration which is seen as part of the unsustainable population growth in high-income countries. The main argument against immigration raised in these countries is that immigrants accept lower wages than native-born workers who are displaced by the influx of new workers (Frum, 2015). This popular understanding of the impact of immigration is bolstered by academic work done by George Borjas who argues that immigration into the United States depresses wages of low-skilled workers although it does contribute to increases in GDP (Borjas, 2013). Other analysts find that immigration generally has positive effects on income growth and productivity with limited displacement of low-skilled workers (Boubtane, Coulibaly, & Rault, 2013; Mason 2014; Peri, 2012). The positive effects of immigration in high-income countries are greater if the immigrants are highly-skilled (Chojnicki & Ragot, 2016; Kerr, Kerr, Ozden, & Parsons, 2016) but even immigrants with limited skills are often able to make significant economic contributions. The positive economic impacts of migration may not be sufficiently compelling to counter the political opposition these human movements engender, however. The arrival of large numbers of immigrants can upset traditional social systems leading to cultural conflict as well as economic anxieties. While the world economy could plausibly benefit from more open borders, the prevalence of anti-immigration political movements in Europe and other high-income countries makes it unlikely that the global movement of people will be as free as the global movement of goods, services, and capital any time soon. Given the likely evolution of the global population and the fairly low expectations that many have for per capita growth in output, Piketty’s worry that the rate of return to capital will be higher than the economic growth rate leading to increasing concentration of wealth and greater inequality seems warranted. This problem would be less severe if the rate of return to capital were to decline to levels below the current 3% to 4% suggested by Piketty. One would expect this return to decline as greater amounts of capital are amassed which may account in part for Piketty’s estimate that current returns are lower than those of the 19th and early 20th century. Baker et al. (2005) argue that returns to capital are related to the state of the economy so that low economic growth will lead to lower returns to capital. If this is correct, the problem posed by Piketty’s inequality may be at least partially self-correcting. In any case, economic growth will remain important in the 21st century for at least two reasons. First, if Piketty’s analysis is correct, slow economic growth may continue to be a factor in rising inequalities in the distribution of income and wealth. Second, economic growth in low-income countries is crucial for raising living standards and reducing global disparities between the more prosperous industrialized countries and those in which poverty and low standards of living are still rife (Milanovic, 2016). Because population growth plays an important role in overall economic growth, the evolution of world population will continue to be a major global concern.

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