Economics Paper How does birth control policy affect economic growth?

Economics Paper How does birth control policy affect economic growth?

Abstract

Birth control policies for the longest time have had tremendous effects on the economy. These effects have not been put into focus as they deserve. This paper seeks to explain these effects and the correlation that exists between birth control policies and the economic growth of a country. Notably, this research paper aims at giving an overview of birth control and its effects on economic growth. The concept of birth control has been a current issue cutting across both developed and developing countries ingrained in policies taken by the subject government to control its effect on the economic growth rate. This research paper will further give an overview of the correlation between the policies and the economic performance. The Harrod–Domar and Solow models will be utilized in analytical and theoretical aspects to these effects. Besides, the paper will look into various examples such as China’s one-child policy so as to get an insight both the positive and negative perspective of the policies and calculations thereof. The Solow model will incorporate the dependency ratio as the standard measure of the age structure and its effects.

 

Introduction

Birth control is the mode of preventing unplanned pregnancies via vast methods of contraceptives that are ingrained in achieving different economic and social goals. For the last few years, governments across the globe have encouraged and even gone ahead to formulate birth control policies to achieve economic goals and monitoring blooming (Strulik 22). The Chinese government, for example, has had a one child policy for the last couple of decades that it has banked on to curb population growth and improves standards of living and the economy. China opened markets to both the regional partners and international traders and to prevent the breakdown that would otherwise have been experienced; it passed the birth control policy of one child. To encourage this, it promised to provide for only the first child and improve the standards of living (Li 55).

On the other hand, Wheelen 33 portends that birth control policies have presented challenging times to the economists and other pro-birth control activists. In his perspective, fewer children that are born in a given generation means that the future working generation will be less compared to the aged people. This means controlling the population growth today; there will be a less population to provide amenities for hence better living standards and better social facilities to the community. This means that the formulated policy needs to incorporate these aspects before the implementation stage. Borrowing from Robert Malthus theory of population, a population increase is exponential whereas food production growth is arithmetical (Stanley 73). Consequently, this calls for the need to put in place birth control policies to curb population growth.

Having examined the need for population monitoring and birth control policies, this research paper will seek to analyze in details how these measures effect economic growth and the correlation between the reduction in population decrease or increase to economic growth rate. This study will use Solow model in the simplification of the data and findings in addition to giving a better understanding of assumptions behind birth control and the effect on economic growth rate.

Literature review

Vast studies have examined the question on how birth control policies affect economic growth but Martha Baily’s work on Fifty years of family planning is of particular interest in this study.  Her study brings out the impact of the birth control policies in the United States of America for 50 years. She points out very notable observations from the comments of President Lyndon and Nixon how Birth control policies have improved the opportunities available to both children and women which in turn has increased their output and productivity in the economy (Yu 107). In the 1960s and 1970s, the government of the United States of America boosted its investment in the family planning methods by availing pills as part of its birth control policy.

Martha observes that the government’s decision led to a higher participation of women in the economy, increased labor supply and the aggregate income per family increased. Women who adopted these family planning methods were noted to be more financially secure with an increased productivity which boosted the economic growth rate. She further notes that fewer kids often means that more and more resources are invested in manageable number of kids which equips them with the necessary skills to drive the economic output of the nation hence boosting the Gross Domestic Product.

Similarly, the study of Strulik 37 highlights the very basic principle of economic growth that savings drive the rates of economic growth in the right direction. He notes that with fewer children, fewer resources are invested in their growth hence the parents can save.

Employment Levels among the Young Women 1948-2012 Pacek 44

This graphical representation shows that the employment levels among the young women have been on the increase. This is mainly because birth control has given women the liberty to choose the times of birth hence can make good career investments.  As Martha presents in her paper, the United States of America made investments in birth control in early 1960s. From the graph it can be noted, in this period the employment levels in USA among the women increased.

Hurgor Strulik in his Unified growth theory also observes that there is an increase in labor supply in an economy that has birth control policies (McClure 77-78). This is mainly because women can choose the spacing and period of giving birth which lowers the costs they have to bear in investing in long-run careers and allows them to get more professional jobs which increase their economic output hence economic growth.

Zhihao Yu, a professor at Carleton University, in his presentation on Demographic dynamics and economic take off in 2010, brought forth a case study in China and the various impacts the birth control policy of one child has had on its economy. He observed that China’s GDP growth rate in the year 2007 was 9.42% and was attributed to China’s open policy economy (Horvat 123). A low dependency ratio is another major contributor to this takes off as the lower the ratio of kids to working parents, the higher per capita output in the economy.           He further elucidated that China’s take-off occurred in the early 1980s right after the dependency ratio got to the threshold point. Though given less credit and focus by the mainstream data presenters, birth control policy has played a very vital role in the economic growth rate of China.

Harrod Domer model is another post-Keynesian economic model that shows the economic growth and the level of economic growth as affected by the levels of savings and productivity. It makes the assumption that the actual growth of an economy is the rate at which the county’s GDP increases per annum (Baily 87-88). It presents the economic theory that for growth to be maintained at a certain rate, full employment must be maintained. In a nutshell, this means that if the labor force increases by a certain percentage, to maintain full employment, the economic growth rate should be the same percentage. As the labor increase by this model, it calls for a birth control policy since an exponential growth in population without a matching increase in economic growth lowers the employment levels which in turn reduce the productivity in the economy hence slowing the economic growth rate.

Birth control policies, therefore, have served to control this exponential growth in population which has helped in maintaining the employment levels and productivity in an economy.

 

 

Y= f (k) where y is the output and k the capital stock.

 

dY / dK = c =dY / dK = Y / K

sy = S = I

Change in K = I- p.  Where p is the depreciation rate

Differentiating,

dY / dK= Y(t+1) – Y(t)

K(t) + sY(t) – pK (t) – K(t)

We therefore obtain:

sC – p = dY*/y

When saving rate is multiplied with the marginal product of depreciation, the growth rate is obtained. Birth control being a factor that increases the saving rate in households, a direct correlation can be obtained between the birth control and economic growth.

This is a simplified representation of the Harrod Domer model which shows output to be a function of capital stock. Harrod Domer stresses that to generate economic growth; there should be a substantial increase in capital stock of the economy. This capital stock can be increased through a generation of more goods and services. There is a capital output ratio which measures the productivity of the investment taking place in the economy. If this ratio decreases in the economy, the economy becomes more productive. This means that in a normal economy, higher amounts of output are produced by investing fewer. This means that for the economic growth rate to increase governments need to encourage savings in the economy and more technological advances. The birth control policies have made this savings side of the economy increase. This is due to less resource invested in raising few kids that many unplanned children. The subsidies in contraceptives have also increased the marginal propensity to women and couple due to less money spent in the acquisition of these contraceptives.

In the paper by the Planned Parenthood Federation of America, it is brought to light that the birth control advances have increased the empowerment of women both socially and economically. It notes that Bloomberg BusinessWeek listed the invention of the contraceptives as one of the most transformational developments of the last century. This empowerment of women has narrowed the income gap between men and women. It is noted that access to the pill to college students has kept quite some students in school hence not affecting their education schedule. It is noted that birth control has led to an increase in the proportion of women divulging in skilled careers. This has increased their productivity and the total output to the economy which is translated to the economic growth of the country. The subsidies on these contraceptives have saved women money which reduces the consumption of the women and increases savings, a component of economic growth.

Both the Solow model and the Harrod Domer emphasize on the very major importance of the savings to the economic growth rate. Savings in an economy without a burgeoning population to support is higher hence a higher economic growth rate in countries with birth control policies (Pacek 76-77). Solow model operates with a steady state which the economy works. To change the steady state, the government ought to adjust the savings rate and birth control policy is one if the ways to change this savings rate.

Research Questions

In order determine how birth control policy affects economic growth, the following research questions will help guide the researcher:

  1. What is the relationship between birth control policy and economic growth?
  2. What is the effect of birth control policies on economic growth among women?

Methodology

Sampling

The sample for the primary study would involve 330 respondents. Random sampling of the respondents will be done where respondents will be given an equal chance of participating in the study. The researcher assumes that a sample size of 330 can result in rich information.

Research Design

 A research design is an arrangement of conditions necessary for data collection and analysis in a manner that endeavors to combine the relevance of the study purpose and economy of the procedure (Weathington 60). This is a descriptive, analytical and correlational paper that seeks to draw the clear conclusion to assumptions made on the effects of birth control policies on economic growth and also seeks to outline this correlation clearly in a clear way for a better understanding of the same.

This research study will employ a descriptive design. A descriptive design constitutes of interviews and questionnaires as means of collecting data. Specifically, this study will employ interviews as a method of data collection. Choice of this study design is appropriate evaluating how birth control policies affect economic growth.

Research process

This study will use interviews for data collection. This is because the tool is effective in evoking the respondent’s perceptions and experiences. Interviews give respondents freedom to give their opinions and make suggestions (Stanley 65). The researcher will ensure that the research instruments are tested for validity before using them for data collection. To ensure the validity of the research tools, test-retest will be conducted. Besides, peer review will enable the researcher conduct content validity.

In addition, the researcher will ensure the reliability of the research instruments is attained. In order to attain reliable research innstruments, pilot study will be utilized. Cronbach coefficient will be computed to further ensure reliability. The following hypothesis will be tested:

There is no relationship between birth control policy and economic growth (Null hypothesis)

There is a relationship between birth control policy and economic growth (Alternative hypothesis)

Findings

  1. Relationship between birth control policy and economic growth

It was established that there is a direct impact of birth control policies on the economic growth rate of the economy. From the data analysis, it was established that the population growth rate has the effect on employment levels and productivity which is directly transmitted to the level of economic growth rate and the development of the population. Countries with a clearly outlined birth control policies have an increased economic growth ever since the policies took root in the economy and their implementation being fast tracked. Countries like China that have a one child policy are a clear and perfect example of this correlation.

By the year 2007, it was estimated that the one child policy in China had averted around 400 million births. Had these births occurred, it would mean that the ratio of working population to total population would substantially decrease which would slow the increase and growth in real GDP by around 10-15%. On the other hand, this study found the primary components of growth are labor, capital, and productivity. Ingrained in these components, anti-birth control activists argued that it reduces the number of workers in an economy which reduces capital accumulation and productivity hence slowing growth. In future, there might be an older generation to take care of which will, in turn, increase the dependency ratio slowing growth and bringing the gains of the policies down.

The research, therefore, established that there is both negative and positive effect on economic growth of the birth control policies and that they require a clear and well thought long-run analysis of their effects. Based on Malthusian theory, there should be a check on the exponential growth of population which has slowed growth in areas like Africa where the parents cannot provide better for their kids hence losing them to early childhood diseases and fail to afford for their education. This blooming child population with zero skills in education and less resource investment increases the dependency ratio and slows the economic growth of the countries in question. Dependency ratio should be lower so as to achieve a high per capita income.

  1. Effect of birth control policies on economic growth among women

This study found that the availability of cheap birth control pills which are part of birth control policies has improved the well-being of women in financial and emotional well-being. In a census data by the United States of America, the decrease in poverty among its citizens in the late 1960s and early 1970s can be attributed to birth control programs. This served to improve the women’s well-being and economic resources invested in their economic growth. Notably, this study found that in the USA, effective implementation of the birth control policies has saved the government a lot of money spent on Medicaid. These savings translates to an improved economy in the long-run. Delaying birth or birth control for that matter was also found to be helpful in reducing the existing gap between working mothers and their childless colleagues which narrow the possibility of women needing public assistance.

Conclusion

This paper has established the effect of Birth control policies on the economic growth rate of a country or a locality. Blooming population coupled up with mismanagement of the same has slowed growth in developing countries. These monies would otherwise be used in development issues that would bring more economic growth. It was interesting to note how population increases geometrically whereas resources and food supply increase arithmetically. A large population has ripple effect by lowering the resource investment which in turn translates to the dependency ratio remaining unchanged over the years. The high dependency ratio is a recipe for a slowed growth rate and stagnant economic development.

This study noted that the introduction of birth control policies in developed countries has a positive impact since it corrects all regulates population and ensures that there is no depletion of natural resources or capital stock. Birth control policies have had a more positive effect on economic growth rate than the negatives. By reducing the population growth rate the economy has less depletion of resources, consequently, fast tracking growth rates. Therefore, ingrained in the study findings, birth control policy has more positive impact on the economic growth rate in comparison with the negative consequences. Birth control policies were found to increase economic performance of many countries across the globe, for instance, China. These controls should be implemented by countries experiencing population growth rates that are not sustainable.

Further, the study findings elucidates that establishment of birth control has led to healthier families which mean more healthy economies. Birth control policies, however, should be implemented in a systematic order so as not to have a generation in future where senior citizens outnumber the young working generation as this would increase the dependency ration

 

Works cited

Baily, Martin. Exploring the Productivity Puzzle. Addison-Wesley Publishing Company. 2014. Print.

Horvat. Theory of the international trade: Alternative approaches. New York: St. Martin’s Press. 2012. Print.

McClure, Montague. Correlates of Behavioral Preferences. A Journal for IMC Strategic Planning, 44, 370 – 377. 2009. Print.

Miller. Paving Wall Street: Experimental economics and the quest for the perfect market. New York: Wiley. 2012. Print.

Pacek. The Future of Business in Emerging Markets the success factors for market growth in the 21st century. Singapore: Marshall Cavendish. 2012. Print.

Percy, Randrup. Emotional Response on Product and Brands. Addison-Wesley Publishing Company. 2014. Print.

Stanley, Nelton. Research ethics: A psychological approach. Lincoln: University of Nebraska Press. 2011. Print.

Strulik, Weisdorf. The Simplest Unified Growth Theory.  Oxford: Oxford University Press. 2013. Print.

Weathington, Cunningham. Understanding business research. Hoboken, N.J.: John Wiley & Sons. 2011. Print.

Wheelen, Hunger, Strategic management and business policy (8th ed.). Upper Saddle River, NJ: Prentice Hall. 2014. Print.

Yu, Zhihao. Demographic Dynamics and Economic Take-Off. Ottawa: The Centre. 2011. Print.