Fertility, economic growth, and human development causal determinants of the developed lifestyle

The paper focuses on the long-term determinants of economic development and demographic transition and identifies the causal structure governing the triad of high income, high human development and low fertility rates defined as the “developed lifestyle”. We construct a balanced panel for 72 countries between 1980 and 2007 and use panel unit-root and cointegration tests. In estimating the long-run relationship between cointegrated variables, we use the dynamic OLS (DOLS) estimation techniques. Empirical results show a causal long-run relationship between high income, high human development and low fertility. The evolution of the developed lifestyle differs significantly, however. In advanced economies, the demographic transition is essentially complete and therefore only changes in human development and income matter. In developing countries, fertility is negatively related with human development, but positively with income and – consistently with Galor and Mountford (2006, 2008) – trade. Moreover, we find no significant impact from human development on income – either for advanced economies or for developing countries.