FAMILY PLANNING, GROWTH, INCOME DISTRIBUTION: GRAPH-THEORETIC PATH ANALYSIS OF RWANDA

Abstract

This paper explores macroeconomic linkages among family planning, human capital and economic growth in Rwanda. Based on a disaggregated social accounting matrix (SAM), welfare effects of alternative exogenous injections are investigated, and the high and low-income pathways are identified by graph-theoretic path analysis. Three important findings follow from the analysis. First, rural income gains spread over the entire economy, while urban income gains are largely contained within urban areas. This suggests a relatively larger income multiplier effect of rural investments. Second, investing in family planning and health promotes agricultural production, with a considerable rural employment effect. Thus, targeted rural investment should yield economic growth followed by an improvement in income equality. Third, a unit increase in the consumption of family planning and health commodities is respectively associated with 1.3 unit, 1.2 unit and 0.74 unit increase in the agricultural, service and manufacturing production; It further generates 60% more income for the urban-Kigali households than rural households. To sum up, benefits of investing in family planning-health should not be overlooked in terms of improvement in rural employment, agricultural production and poverty reduction.Keywords: Family Planning, Fertility, Human Capital, Growth, Income Distribution, Graph-Theory, Path Analysis, SAM Multiplier, RwandaJEL classification: I15, I25, I38, J13, O15, O21(ProQuest: ... denotes formulae omitted.)1. BACKGROUND AND INTRODUCTIONFamily planning has long been a central component of population policies and programs and is an integral part of reproductive health.1 It provides couples with methods of preventing unplanned pregnancies not only to reduce fertility and child mortality but also augment investment in child health. Since the 1960s, the use of family planning has been steadily increasing in the developing world. For Europe and the United States, for example, it took a century to reduce their average family size from around 6 to 3 children. For the developing world, however, a comparable decline in family size took only about four decades during 1960-2000. Despite the convergence in family size across the two worlds, unmet need for family planning in the developing world still remains about one-fifth of the currently married women.Rwanda is no exception to high unmet need for family planning. Relative to other African countries, it is leading with its low contraceptive prevalence (36% in 2008), high fertility rate (5 children in 2009) and high unmet need for family planning (32% in 2008).2 Data obtained from the 2008 DHS paint a picture of a rather unstable pattern of contraceptive use among married women. The contraceptive use sharply fell after the 1994 genocide, from 21.2% in 1992 to only 13.2% in 2000 and thereafter it slowly increased until 2005 to the point where 17.4% of married women were using modern contraception. By 2008, the contraceptive use has leveled around 36% - which can largely be attributed to the recent surge of investment in family planning services and increasing flow of donor funds targeting population programs.3 At present, the main concern is the adverse effect of high unmet need and high fertility on per child human capital investment (i.e., education, health and nutrition) and economic growth through declining productivity.Recognizing the link between fertility and development outcomes, the Rwandan government views family planning as an important instrument for targeting poverty and raising per child resource allocation at the household level. However, poverty is multi-sectoral in its cause, and decreasing family size can reduce it only partially. The creation of new employment opportunities is necessary for households to benefit from their investment in child quality because employment, sectoral productivity and household family size decision are interlinked at the meso level through economic and demographic policies. …