Monday, October 7, 2013

Plough, Fertility, and Growth

Alberto Alesina et al. have a paper called "Fertility and the Plough," in which they show the connection between fertility and agriculture. Countries with plough agriculture tend to have lower fertility rates because the plough, authors suggest, requires physical strength:
We find a negative correlation between historic plough use and total fertility rates today across countries and among first- and second-generation immigrants in the US. We argue that the explanation for this result lies in the fact that children (like women) are less useful for plough agriculture. The plough requires strength and obviates the need for weeding, a task particularly suitable for women and children. Therefore, where plough agriculture was practiced, the cost of having children may have been lower (because women were more confined to the home), but the benefit of children was also lower (since they were less useful in agriculture). We also show that, consistent with this explanation, societies that historically used the plough were also more likely to have a preference for fewer children.
There's one more important channel the plough affects future economic decisions. Since the 1960s, Gary Becker do important theoretical work on family and education. One major point of his work is that parents invest their time in children, and the fewer children they have, the more investment each child gets. This investment is an investment in human capital, and human capital is a necessary condition for growth.

What does it have to do with the plough? Consider a few points about a plough economy:

  1. The plough reduces economic incentives of having more children. That increases parent investment per child.
  2. Since children are less useful in the major economic activity, they get better chances of doing other tasks, including learning.
  3. Since women participate less in farming, they do more household work, which also has positive spillovers for children.

Of course, points (2) and (3) are rather weak: children and women did a lot of household work, which offset the impact of being relatively free from agriculture. This is an intertemporal tradeoff between early jobs and education. Even now developing countries underinvest in their youth's human capital because parents don't have resources to invest or prefer money coming from children now to the money that may come in the future.

Point (1) partly explains a well-known negative relations between fertility and GDP:

The plough acts like this: plough agriculture → incentive to have fewer children → lower fertility → higher investment per child → higher human capital → higher output per capita. Other channels include, for instance: more educated females → more job opportunities → fewer children → lower fertility. And lower fertility reinforces investments per child, so that the plough story continues from the middle to encourage more economic growth.

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