Cohort size and labor markets in developing countries

Harvard University (Sch Of Public Hlth), Boston MA

Investigators

Abstract

[unreadable] DESCRIPTION (provided by applicant): The demographic transition in the developing world has produced baby boom generations, which have significantly changed the age structure of their populations over the past few decades and will contribute to population aging over the next few decades. These changes have potentially profound consequences for development, in large part through their effects on labor markets and fertility yet these effects have not been examined empirically in developing countries. We test an influential account of these effects called the cohort crowding theory. This theory hypothesizes that: (1) Because of imperfect substitutability between younger and older workers, large cohorts of young adults created by a baby boom will face adverse labor market consequences, in particular lower labor force participation rates. We also test whether sufficient substitutability exists for large young adult cohorts to adversely affect the labor force participation of prime age and older workers. (2) Cohort effects differ by gender, with implications for fertility. Large young adult cohorts may reduce the participation of young males and in turn raise young female participation and lower fertility if female leisure is a normal good and children are expensive. Age structure changes wrought by the demographic transition could therefore provide an explanation for the magnitude and timing of global fertility transitions. We test these hypotheses by econometrically analyzing panel data on developing countries from 1960 to 1990 on population age structure, macroeconomic and demographic variables, and cohort-specific measures of labor force participation. [unreadable] [unreadable]