Unified Growth Theory

According to Oded Galor it has become evident that in the absence of a unified growth theory that is consistent with the entire process of development, the understanding of the contemporary growth process would be limited and distorted. He quote Copernicus to the effect that:

?It is as though an artist were to gather the hands, feet, head and other members for his images from diverse models, each part perfectly drawn, but not related to a single body, and since they in no way match each other, the result would be monster rather than man.?

Citing the attempts to develop unified theories in physic, he suggests that the entire process of development and its basic causes ought to be capturable by a single unified growth theory.

The observed role of the demographic transition in the shift from the Post-Malthusian Regime to the Sustained Growth Regime and the associated non-monotonic evolution of the relationship between income per capita and population growth added to the complexity of the desirable dynamical system.
In order to capture this additional transition unified growth theory had to generate endogenously, in the midst of the process of industrialization, a reversal in the positive Malthusian effect of income on population, providing the reduction in fertility the observed role in the transition to a state of sustained economic growth.

According to Galor:

“During the Malthusian epoch that had characterized most of human history humans were subjected to persistent struggle for existence.”

I don’t think that this is entirely correct. What would perhaps be beter to say would be that there was a population ecology dynamic were the level of fertility was set to achieve a desired and near constant standrad of living. This standard of living may have been nearer or farther from what Galor would consider a ‘subsistence’ level.

“The acceleration in the rate of technological progress in the second phase of industrialization, and its interaction with human capital formation ultimately prompted the demographic transition. The rise in aggregate income was no
longer counterbalanced by population growth, enabling technological progress to bring about sustained increase in income per capita.”

Something I don’t like:

“The relationship between fertility and mortality during the Malthusian epoch was complex. Periods of rising income per capita permitted a rise in the number of surviving offspring, inducing an increase in fertility rates along with a reduction”

I don’t understand this part: “a rise in the number of surviving offspring, inducing an increase in fertility rates”, since a rise in the number of surviving children would mean a decline in mortality, and hence greater population, and this in a longer term adjustment might lead people to try and have less children, not more.

“Periods of rising mortality rates (e.g., the black death) induced an increase in fertility rates so as to maintain the number of surviving offspring that can be supported by existing resources.”

Again this is strange. I don’t know what the causal mechanism is meant to be here. Fertility is meant to be the number of live births per mother. This kind of fertility can be influenced by eg diet, which can make the woman more fertile, or lactation, which can reduce birth frequency. Possibly he means that with the reduced population following the black death people were able to eat better, so women had more children.

Two Factors: Acceleration of Technological Change, and accumulation of capital.

“During this regime, the Malthusian mechanism linking higher income to higher population growth continued to function, but the effect of higher population on diluting resources per capita, and thus lowering income per capita, was counteracted by the acceleration in technological progress and capital accumulation, allowing income per capita to rise despite the offsetting
effects of population growth.”

Here is the problem:

“Despite the decline in mortality rates, fertility rates (as well as population growth) increased in most of Western Europe until the second half of the 19th century (Coale and Treadway (1986)). In particular, as depicted in Figure 2.11, in spite of a century of decline in mortality rates, the crude birth rates in England
increased over the 18th century and the beginning of the 19th century. Thus, the Net Reproduction Rate ( i.e., the number of daughters per woman who reach the reproduction age) increased from about the replacement level of 1 surviving daughter per women in 1740 to about 1.5 surviving daughters per woman in the eve of the demographic transition in 1870.”

There is a confusion between crude birth rates and Net reproduction rates. There is no consideration of the tempo effect.

“It appears that the significant rise in income per capita in the Post-Malthusian Regime increased the desirable number of surviving offspring and thus, despite the decline in mortality rates, fertility increased significantly so as to enable households to reach this higher desirable level of surviving offspring.”

Desireable offsring???

“As depicted in Figure 2.12, increased fertility was achieved
by earlier female?s age of marriage and a decline in fertility by a delay in the marriage age.”

Here we have it. The tempo effect (see figure).

“As reflected in Figure 2.14, the percentage of the population that lived in European cities with a population larger than 10,000 people nearly tripled over
the years 1750-1870, from 17% to 54%. Similarly, the percentage of the population in England that lived in cities with population larger than 5,000 quadrupled over the 1750-1910 period, from 18% to 75% (Bairoch 1988)).”

Think about Lutz on fertility and population density.