Women’s Rights and Demographic Dividends

January 9, 2015

Advancing Economic Freedom for the Poor
Women’s Rights and Demographic Dividends
Yuwa Hedrick Wong

It is common to hear in business conferences, industry forums and policy seminars the buzz words of “demographic dividends”.  These are buzz words because they are both catchy and fuzzy. Catchy because they conjure up a happy picture of a society enjoying strong economic growth by having lots of young people; yet fuzzy because it is rarely explained how a teeming mass of young people would lead to strong economic growth.

It turns out that a number of pre- conditions need to be met before a young population yields demographic dividends, and the process is by no means simple or straightforward. A large young population on its own simply means a large potential workforce, but it does not guarantee that there will be jobs for all of them, nor will the jobs always pay a living wage and be productive enough to drive economic growth.

To begin with, a great deal of investment is needed in health care, education, skill training, technologies, and physical infrastructure in order to realize the potential of a large young workforce. And critically, this in turn requires that the high birth rates that produced the large young population earlier decline quickly so that the society’s resources (always scarce especially in low income countries) can be diverted from spending on raising large numbers of children to investing in their health, education, and productive skills. This is referred to as demographic transition. In this process, a decline in women’s total fertility rate[1] once the bulge of young population is formed is a prerequisite for realizing the demographic dividends.[2] A society that keeps on producing large numbers of children is not even in the running for demographic dividends.

With declining birth rates, women now also have more opportunities to join the labor force, thereby raising women’s labor force participation rates. Productively employed young workers, boosted by more women entering the workforce, in turn raise the economic output of the society, while their ability to save more helps to enlarge the pool of capital available for yet more investment. It is the sum of these contributions: higher outputs by a large, young, well educated and productive workforce, increase in women’s labor force participation, and a bigger savings pool that create demographic dividends.

Without the requisite investment in the young and women’s falling fertility rates, the economic potential of a large young population cannot be realized. Instead, the society is burdened with a large number of poorly educated, unemployed or underemployed, restless, and frustrated young people. They are a volatile mix that could easily lead to social unrest and instability. Instead of demographic dividends, they constitute a demographic burden.

Today, South Asia, Sub-Sahara Africa, and parts of Latin America have the youngest populations in the world. However, the speed with which total fertility rates are declining in countries in these regions varies very significantly. In South Asia, for example, Bangladesh has had the fastest decline, from 6.9 in 1970 to 2.4 in 2010. The decline is much slower in Pakistan, from 6.9 in 1970 (same as Bangladesh as they were then the same country) to 3.9 in 2010. India is in between falling from 5.7 in 1970 to 2.7 in 2010. In many Sub-Sahara African countries the total fertility rates are more like Pakistan’s rather than Bangladesh’s.[3] So in many developing countries one of the critical pre-conditions for realizing demographic dividends remains absent.

A direct and effective way to ensure that the masses of young people yields demographic dividends instead of becoming a demographic burden is to make sure that the basic rights of women, especially women in the lowest income households and in marginalized groups, are well protected. When girls have the same education opportunities as boys, when women are free to decide when and whom to marry, and whether and when to become a parent, then total fertility rate is likely to decline more rapidly than otherwise. Women’s rights are a short cut to demographic dividends.

 

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[1] Defined as the average number of children a woman has in her life time. A total fertility rate of 2.1 signifies a stable population.
[2] Bloom, D.E., D. Canning, & L. Rosenberg, February 2011. “Demographic change and economic development in South Asia”, PGDA Working Papers No. 67, Harvard School of Public Health.
[3] United Nations Population Fund.

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