Population, Poverty and Development: Review and

Research Gaps

Aniceto C. Orbeta, Jr. Philippine Institute for Development Studies

Outline• Population and Development: A

comparison of Philippines and Thailand

• Population and Poverty1. Philippine demographic trends2. Philippine poverty alleviation record3. Links4. Evidence

• Implications for Policy• Research Gaps

Fig 2. Per Capita GDP, Real US$ (1995=100)Source: World Bank, World Development Indicators 2002

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1960 1965 1970 1975 1980 1985 1990 1995 2000

Philippines

Thailand

Fig 3. Population Size, 1960-2000Source: UN World Population Prospects, 2000 Rev.

0

10

20

30

40

50

60

70

80

1960 1965 1970 1975 1980 1985 1990 1995 2000

Philippines

Thailand

Fig 4. Total Fertility Rate, 1960-65 to 2000-2005

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

1960-65 1970-75 1980-85 1990-95 1995-00 2000-05

Philippines

Thailand

Fig 5. Infant Mortality, 1960-65 to 2000-05

0

20

40

60

80

100

120

1960-65 1970-75 1980-85 1990-95 1995-00 2000-05

Philippines

Thailand

•Population & Development: Philippines & Thailand - 1/2

Fig 7. Gross Domestic Savings as % of GDP, 1960-2000

0

5

10

15

20

25

30

35

40

1960 1965 1970 1975 1980 1985 1990 1995 2000

Philippines

Thailand

Fig 8. Gross Capital Formation as % of GDP, 1960-2000

0

5

10

15

20

25

30

35

40

45

1960 1965 1970 1975 1980 1985 1990 1995 2000

Philippines

Thailand

Fig 6. Youth and Old Dependency Ratios, 1960-2000

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1960 1965 1970 1975 1980 1985 1990 1995 2000

Phil., Youth

Thai., Youth

Phil., Old

Thai., Old

Fig 10. Gross Enrollment Rate, Sec. & Ter., 1970-1998

0

10

20

30

40

50

60

70

80

90

100

1970 1975 1980 1985 1990 1995 1998

Phil, Sec.

Thai, Sec.

Phil, Ter.

Thai, Ter.

•Population & Development: Philippines & Thailand - 2/2

Population and Sustainable Development Framework

Population

SizeStructureDistribution

FertilityMortalityMigration

Production

Production/Employment

ProductiveCapacity:Natural Resources and EnvironmentPhysical CapitalHuman Resources

Development

Goods and Services

Capabilities/Well beingLonger lifeTo achieve desired fertilityOthers

Review of demographic developments

• Slow fertility decline; slower than most countries in the region (Table 1)

• Average performer in mortality (Table 2)• Continued high population growth; higher

than most countries in the region• Implications:

1. Expect extended years of high youth dependency

2. “Demographic onus” rather than demographic bonus like East Asia Countries

TFR of Selected Asean Countries, 1960-2000

0.001.002.003.004.005.006.007.008.00

1960-65 1970-75 1980-85 1990-95 1995-00

Phil Thai Viet Ind Mal

IMR of Selected ASEAN Countries, 1960-2000

0

50

100

150

200

1960-65 1970-75 1980-85 1990-95 1995-00

Phil Thai Viet Ind Mal

•Fertility and Mortality in Selected ASEAN Countries

Review of poverty alleviation record

• Modest gains from 44.2% in 1985 to 33.7% in 2000

• Number of poor people increased from 4.6 million in 1985 to 5.14 million in 2000

• Gains are only clear in urban areas (declined by 14 compared to only 4 percentage points in rural areas between 1985-2000)

• Inequality has not improved:1. Share of poorest quintile: 4.8% (1985) – 4.7% (2000)

2. Share of richest quintile: 51.2% (1985) – 54.8% (2000)

3. Gini coefficient: 0.47 (1985) – 0.51 (2000)

Poverty Incidence and No. of Poor, 1985-2000

0

10

20

30

40

50

60

1985 1988 1991 1994 1997 2000

0

1

2

3

4

5

6

Mil

lio

ns

Phil

Urban

Rural

No of Poor

Figure 1. GINI Ratios, 1975-2000

0.47 0.47

0.49

0.47

0.520.51

0.440.450.460.470.480.490.5

0.510.520.53

1985 1988 1991 1994 1997 2000

•Poverty and Inequality, 1985-2000

Family Size and Poverty

• An empirical regularity that poverty incidence is higher the larger the family size

1985 1988 1991 1994 1997 2000

National 44.2 40.2 39.9 35.5 31.8 33.7

1 19.0 12.8 12.7 14.9 9.8 9.8 2 20.0 18.4 21.8 19.0 14.3 15.7 3 26.6 23.2 22.9 20.7 17.8 18.6 4 36.4 31.6 30.1 25.3 23.7 23.8 5 42.9 38.9 38.3 31.8 30.4 31.1 6 48.8 45.9 46.3 40.8 38.2 40.5 7 55.3 54.0 52.3 47.1 45.3 48.7 8 59.8 57.2 59.2 55.3 50.0 54.9

9 or more 59.9 59.0 60.0 56.6 52.6 57.3

Source of basic data: Family Income and Expenditures Surveys, 1985-2000, NSO

Family SizePoverty Incidence

Poverty Incidence by Family Size

Population and poverty links

• Growth Channel: Does demographic change (change in population growth, fertility, mortality, age structure, etc.) affects changes in the level and growth of average attainable well-being per person?

• Distribution Channel: Does demographic change affects the distribution of income given attainable well-being per person?

• Conversion Channel: Does demographic change affects the conversion of attainable welfare per person into actual well-being per person?

Evidence on the growth channel• Demographic changes (decline in population growth,

fertility, mortality and changing age distribution) have sizeable impacts on economic growth; account for about half of recorded economic growth in Southeast Asia, one third in East Asia

• Fertility and mortality effects are offsetting; mortality decline stimulates growth, rise in fertility attenuates growth; this is the primary reason for the limited effect in analysis that focus on population growth

• In the Philippines, economic growth contributes bigger proportion in reduction of poverty; in cross-country analysis it contributes about one half

Evidence on the distribution channel

• High fertility skews the distribution of income against the poor in cross-country analysis; in the Philippines, there is still no direct evidence but indications are pointing to the same direction given the limited employment opportunities generated and the rapidly growing labor force

• There is limited evidence on the dependency burden effect via the dilution effect; this effect appears to be not very strong

• On the acquisition effect, there are mixed results on the impact of an additional child on labor force participation of fathers but this leads to a decline of mother’s labor time and an increase in her home time

Evidence on the conversion channel

• Doubts on whether poor families can freely choose their family size given poorer access to FP services, particularly for the Philippines

• There are evidence on both sides of the economies of scale argument

• Clear deleterious effects of large family on investments in human capital

• Clear increase in vulnerability with larger family size

Family planning practice by socioeconomic class

Source Poor Non-Poor Total

Contraceptive prevalenceFPS 2000\a

Modern 26.3 35.0 32.3Traditional 13.9 15.1 14.7

Any method 40.1 50.1 47.0

APIS 1998\b 40.5 46.2 44.1APIS 1999\b 33.7 37.0 35.8

Access to family planning servicesAPIS 1998\b 85.2 90.7 88.7APIS 1999\b 89.1 93.1 91.7

FPS - Family Planning Survey

APIS - Annual Poverty Indicators Survey

\a - socioeconomic status is based on a score derived from questions about housing convenience/durable goods\b - socioeconomic status based on income deciles: poor = lowest 40%; Non-poor=highest 60%

Population Growth and Human Capital Accumulation – Household Level – 1/2

Survey of developing country evidence• King (1987)

1. Children in large families perform less well in school2. Children in large families have poorer health, lower survival

probabilities, and are less developed physically• Lloyd (1994)

1. Resource dilution with each child getting smaller share of family resources including income, time and maternal nutrition

2. Diminished access to public resources, such as health and education

3. Unequal distribution of resources among siblings

Population Growth and Human Capital Accumulation – Household Level –

2/2

• Evidence from Philippine data1. High fertility negatively affects school participation of older

children (13-17 years old) although it does not affect school participation of younger children (7-12 years old) (Herrin 1983, Bauer and Racelis, 1992)

2. Large negative impact on boys (DeGraff et al., 1993)

3. Expenditure per child is also negatively affected (Bankosta and Evenson, 1978)

Family Size and Vulnerability

• Using the 1997 FIES and the 1998 and 1999 APIS, it was found that 46% of the family remained to be non-poor (N) while 22% remained to be poor (P) throughout the period. Interestingly, as one goes from households who remained to be poor to households who remained to be non-poor, the family size declines (Reyes, 2002).

Poverty Mean FamilyGroup Size

PPP 6.1PPN 5.1PNP 5.4NPP 5.4PNN 4.8NNP 5.1NPN 4.6NNN 4.6

Philippines 5.0

P-Poor; N-Non-Poor

Source: Reyes (2002), Table 32

Sources of Basic Data: Run from the matched Public Use Files of the 1997 Family Income and Expenditures Survey, and the 1998 and 1999 Annual

Poverty, Vulnerability and Family Size, 1997, 1998, 1999

Implications for policy – 1/2• Demographics play an important role in poverty

alleviation; better control of fertility should be an important component of poverty alleviation

• While there maybe reasons why the poor have large families, it will be difficult, particularly for the Philippines, to sort which ones are due to lack of control over fertility and which ones are due to preferences; better control of fertility is needed to clarify this

• There are intergenerational impact of current fertility primarily via lower investments in human capital– this is the main avenue of intergenerational transmission of poverty; need for pro-active subsidy and better targeting of public services, e.g. education and health, which are in themselves investments with high social returns apart from demographic concerns

Implications for policy 2/2• Importance of consistent economic growth well-

established; still the primary strategy of development for the Philippines; a conducive economic environment is needed to translate potential benefits from demographic changes

• With globalization, lower fertility is needed to benefit from opportunities at the aggregate and household levels, and to lessen the vulnerability of households to economic shocks

• The question to ask: Is there enough reasons for government to intervene in fertility decisions?; for poor households does the “with persuasion” case in Herrin (2002) apply?

Research Agenda – Population, Poverty and Development

• Improve upon the current broad brush attribution of the interaction between population and poverty for the Philippines. There is a need to continue to clarify the interactions, at the macro, community and household levels in the Philippine context. The objective is to find for more effective policy handles

• Poverty, fertility management and preferences and its implications at the household level