Population economics studies how demographic variables such as fertility and mortality respond to economic incentives and affect the economic development of societies. The population of a country changes very slowly over time: most of the people who will populate a given territory next year are already alive this year. However, despite slow dynamics and high predictability in the short- medium run, the effect of population on the economic outcomes are far from negligible. On the contrary, as time passes, changes in the population size and composition have dramatic effects. In some sense, as formulated by Pearce (2010):
Demography is destiny.
Population change depends on fertility, mortality, and migration. We focus on fertility, and, more precisely, on the relationship between fertility and resources (or income in a broad sense). Starting from the data, this relationship is characterized by four stylized facts:
Fact 1: In all species, when available resources are more abundant, reproduction increases. This is true for plants, animals, and humans before the Industrial Revolution.
Fact 2: Before the Industrial Revolution, the rich had more surviving children than the poor.
Fact 3: The transition from income stagnation to economic growth is accompanied by a demographic transition from high to low fertility.
Fact 4: Now, both within and across countries, the rich and educated households have fewer children than poor and unskilled households.
The first fact is well known from the biology literature. For humans, it was stressed by Malthus in his Essay on the Principle of Population (1798).