Abstract

Rapid population growth is often blamed for economic stagnation in less developed countries. Theoretically, rapid population growth forces scarce capital to be spent on nonproductive segments of the population (e.g., children) and encourages undercapitalization of the economy, underemployment, low wages, and anemic market demand. Alternative views regard rapid labor force growth as economically beneficial. In this cross-national investigation of the economic growth rates of 75 developing countries, we regress the annual average percentage change in real gross domestic product per capita from 1965 to 1990 on demographic models that incorporate either total population growth rates and labor force growth rates or age-specific population growth rates. We find that an increase in the child population hinders economic progress, while an increase in the adult population fosters economic development. We posit a demographic windfall effect whereby the demographic transition allows a massive, one-time boost in economic development as rapid labor force growth occurs in the absence of burgeoning youth dependency. We also speculate on a demographic ratchet effect whereby economies lie fallow during "baby booms," but grow rapidly as "boomers" age and take up their economic roles in society.