Contribution of population growth to per capita income and sectoral output growth in Japan, 1880-1970.

Abstract

The authors measured the positive and negative contributions of population and labor force growth to the growth of per capita income and sectoral output in Japan in the 1880-1970 period. A 2-sector growth accounting model that treats population and labor growth as separate variables was used. 3 alternative methods were used: the Residual method, the Verdoorn method, and the factor augmenting rate method. The total contribution of population cum labor growth to per capita income growth tended to be negative in the 1880-1930 period and positive in the 1930-40 and 1950-70. Over the 1880-1970 period as a whole, population cum labor growth made a positive contribution to per capita income growth under the Residual method (0.35%/year), the factor augmenting rate method (0.29%/year), and the Verdoorn method (0.01%/year). In addition, population cum labor growth contributed positively to sectoral output growth. The average contribution to agricultural output growth ranged from 1.03% (Verdoorn) - 1.46%/year (factor augmenting rate), while the average contribution to nonagricultural output growth ranged from 1.22% (Verdoorn) - 1.60%/year (Residual). Although these results are dependent on the model used, the fact that all 3 methods yielded consistent results suggests that population cum labor growth did make a positive contribution to per capita income and sectoral output growth in Japan. These findings imply that in economies where the rate of technical change in agricultural and nonagricultural sectors exceeds population growth, policies that reduce agricultural elasticities may be preferable; on the other hand, policies that reduce agricultural elasticities are to be avoided in economies with low rates of technical change. Moreover, in the early stages of economic development, policies that increase agricultural income and price elasticities should be considered.