World economy and international markets

Lesson 3: Population and Human capital

Dr. Gonzalo Sanz-Magallón Rezusta

2021-2022
Lesson 3: Population and Human Capital.

Introduction

Dr. Gonzalo Sanz-Magallón Rezusta

Population and human capital 2018-2019
1. Introduction: Economic impacts of demographic changes

Economic variables
Short term:
Demographic variables
• Private consumption: total expenditure and distribution
• Birth rate • Housing demand
• Mortality rate • Spending and demand for public services (health and education)
• Labor market: wages, activity rate, unemployment
• Life expectancy • Balance of payments (migrant remittances, export / import)
• Marriages
• Emigration
Medium and long term:
• Inmigration
• Education, values • Innovative capacity, human capital and economic development
• Funding of pension system
• Expenditure on public services: health, etc.

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 2. The demographic transition and its consequences

Year 1: 250 millions

Year 2012 : 6.900 millions
Anual growth (millions)

Population size (billions)

2050 (forecast): 9.200 millions

Highest growth :
1970 decade: Annual growth 2,1% (To double
each 33 years. Annual increase of de 80
millions

In 2010: Growth of 1,2%;

In 2014: Growth of 0,5% (25-35 million)

http://www.worldometers.info/world-population/

Años

Source: Todaro y Smith (2011): Economic Development, Pearson

TED Talk video: Explaining population growth

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2. Population problems in the global economy

Children per woman > 2,1: generational replacement

Source: OMS (2010)

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2. The demographic transition and its consequences

Note: BR = birth rate; MR = mortality rate; PG = Total population growth

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2. The demographic transition and its consequences
2.2. The Classic Demographic Transition:

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Spain

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2. The demographic transition and its consequences

Video: The Economist

Fuente: Todaro y Smith (2011): Economic Development, Pearson

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2. Migratory movements
• Differences in demographic rates in developed countries (aging population, low fertility rate and
forecast shortage of workforce) and developing countries (with high birth rates, young population and
low employment opportunities) acts as an intense and permanent boost to emigration.

• Economic benefits:
The host country increases its supply of labor factor; potential GDP increases, business initiatives rise.
Country of origin receives remittances, often used in education; training received abroad.
• Drawbacks:
Country of destination: difficulty of integration if there are cultural differences, language, ..
Country of origin a) loss of human capital, "brain drain"
b) social and emotional costs for children, family ties, etc.
Proposed reading activity: Migratory movements. Causes and Consequences
Ratha et al. 2011 Impact of Migration on Economic and Social Development. A Review of Evidence and
emerging Issues, The World Bank, Policy Research Working Paper 5558. Link
Questions to answer (link to on-line questionnaire):
1. What is the least controversial economic effect of migrations for the country of origin?
2. Why remittances have an “income stabilizing effect”?
3. What are the relationships between migration and human capital formation in the country of origin?
4. Explain how can remittances reduce the competitiveness of the country of origin.
5. What are the main social effects of migrations?
6. What are the main economic implications of migrations in the destination country?
7. Explain the main social impacts of migrations on the destination countries
8.What are in your opinion the FOUR most important policy suggestions of the report?

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 4. Education and economic growth

1. Education and human capital are the main determinants of economic progress
2. Human capital includes not only knowledge, but also values, entrepreneurial
attitudes.
3. Human capital has five main sources: parental education, schooling, universities,
adult education and learning on the job.
4. To promote economic growth: a) human capital formation b) attracting human
capital;
5. Important differences in school performance in the world.
6. Governments face a trade off between promoting equity and quality in education
7. Quality can be asses trough international exams (PISA)
8. Equity can be measured as the influence of the student family background in
PISA results.
9. Recent studies have demonstrated the difficulty of improving education achievements.
It is not just spending public money on education.
10. Parents have a central role in students performance.

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Population and human capital
 Europe lags behind the US in attracting highly skilled
migrants….

15
Non-OECD
OECD origin

10
Millions

Low
5
High
Low Middle

Middle
High

0
Europe America
Data Source: OECD Database on Expatriates and Immigrants, 2004

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What can parents do to help their children succeed in school?

Population and human capital