Education drives economic growth, not decline in fertility says study

A new demographic study suggests that economic growth in the world’s developing countries is the result of improvements in education and not falling fertility.

Writing in the journal Demography, researchers from the International Institute for Applied Systems Analysis (IIASA) and the Wittgenstein Centre for Demography and Global Human Capital, both in Vienna, Austria, challenge a central premise of demographic research.

IIASA researcher Warren Sanderson, who is also a professor at Stoney Brook University in New York, says:

“Demographic change influences economic growth.”

Demographers (people who study demography) like Prof. Sanderson have shown how economic development in countries where a significant proportion of the population is of working age, tends to be faster than countries where they are in the minority.

Lead author Jesus Crespo Cuaresma, also a researcher at IIASA, and professor at the Vienna University of Economics and Business, says:

“Countries where a large part of the population is in working age tend to become richer quicker than those with a sizable proportion of children or elderly people.”

Demographic researchers have observed that a falling birth rate presents a “window of opportunity” because this results in a larger proportion of the population being of working age.

And, there is a widely-held view that this phenomenon – known as “the demographic dividend” – is directly linked to economic development. It has even led to countries implementing policies to reduce fertility.

Economic development likely driven by higher education levels

But this new study shows there could be a flaw in that argument. Prof. Sanderson and colleagues conclude that improvements in economic development are more likely due to increased levels of education in young people – reduced fertility is just not enough to drive the growth.

For their study, they gathered data on educational achievement and demographics in 105 countries, and using statistical models analyzed it to look for links among factors such as fertility rates, proportion of the population of working age, and education variables.

They found that the economies of countries where fertility rates had gone down but education levels had not increased, had not developed as much as countries where fertility had fallen but education had improved.

Fertility rate is the average number of children born to mothers during their reproductive years.

The researchers, who include a third co-author Wolfgang Lutz, Director of the Wittgenstein Centre and professor for Social and Economic Statistics at Vienna University of Economics and Business Administration, say their findings show the importance of investing in universal education as a way to raise countries out of poverty.

They conclude:

“Our results imply that improvements in educational attainment are the key to explaining productivity and income growth and that a substantial portion of the demographic dividend is an education dividend.”

Prof. Lutz:

“These insights matter greatly for the ongoing international discussions around extensions of the Millennium Development Goals adopted by the United Nations.”