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Trade and fertility in the developing world: the impact of trade and trade structure

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Abstract

In the literature on trade and development, fertility and trade have been widely discussed as two separate economic forces. However, an important recent contribution connects these two and suggests that international trade between developed and developing countries has an asymmetric effect on the demand for human capital. The asymmetry leads to a decline in fertility rates in developed countries and an increase in these rates in developing countries. We provide additional comprehensive empirical evidence in support of this novel hypothesis. Our findings suggest that countries that export skill-intensive manufacturing goods experience a decline in fertility rates, whereas in countries that export primary, low-skill-intensive goods, fertility rates are affected positively. Further, our findings indicate that the negative influence of manufacturing exports on fertility holds primarily and most strongly for middle-income countries where structural modernization and a growing manufacturing-intensive export sector is observed.

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Notes

  1. For a detailed account of the demographic transition, theory, and trends, see recently, e.g., Galor (2012), or earlier, Bloom et al. (2003), or Lee (2003). See Strulik and Vollmer (2013) for an evolutinary account of cross-country fertility dispersion.

  2. Galor and Mountford (2008) provide a brief overview of the most important papers in the respective areas.

  3. Other theoretical contributions that connect world trade with fertility decisions are Lehmijoki and Palokangas (2009) and Sauré and Zoabi (2011). While the former focus on wage and income effects induced by international trade, the latter concentrate on the development of female labor force participation in connection with international trade and the resulting fertility and growth effects.

  4. As Galor and Mountford (2008) note, there is little authoritative data on the factor content of trade. Even though there may be sections of the manufacturing sector that operate with very little human capital intensity and parts of the primary sector that operate with a high degree of human capital, we would expect our results to be further strengthened if we had more differentiated data.

  5. A good literature overview and a critical account of related problematic issues can be found in, e.g., Winters (2004).

  6. Estimations with the difference estimator do not qualitatively alter our key findings.

  7. A test after Greene (2003) indicates heteroscedasticity within groups. Our test for serial correlation (after Wooldridge 2002) also rejects the null hypothesis of no serial correlation.

  8. We follow the World Bank’s income groups classification: high-income countries, upper middle-income countries, lower middle-income countries, low-income countries with 2009 GNI per capita of more than US$12,195, US$3,946-US$12,195, US$996–US$3, 945 and less than US$996, respectively.

  9. Tests with separate estimations for both variables do not alter our findings.

  10. As early as 1798, Malthus proposed that income increases above subsistence levels are capable of spurring population growth (Malthus 1798).

  11. See, e.g., Doepke (2005) on the relationship between fertility and child mortality in the Becker-type quantity-quality model.

  12. In the empirical section of Galor and Mountford’s paper, this impact is not explicitly tested. However, the authors detect a positive influence of the general indicator “trade/GDP” on fertility in non-OECD countries. Under the assumption that non-OECD countries trade mostly in little skill-intensive (primary) goods, this implicitly supports their theory.

  13. For a comprehensive review see, e.g., Kelley (1988).

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Acknowledgements

The authors would like to thank the anonymous referees for their very insightful comments and constructive suggestions.

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Authors and Affiliations

  1. Economics Department, University of Paderborn, Warburger Strasse 100, 33098, Paderborn, Germany

    Thomas Gries & Rainer Grundmann

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  1. Thomas Gries
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  2. Rainer Grundmann
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Correspondence to Thomas Gries.

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Responsible editor: Junsen Zhang

Appendix

Appendix

Table 3 Summary statistics
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Table 4 Data sources and description
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Table 5 Trade and fertility (fixed-effects estimates)
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Gries, T., Grundmann, R. Trade and fertility in the developing world: the impact of trade and trade structure. J Popul Econ 27, 1165–1186 (2014). https://doi.org/10.1007/s00148-014-0508-x

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