An econometrical analysis of the interdependencies between the demographic transition and democracy

Lechler, Marie

An econometrical analysis of the interdependencies between the demographic transition and democracy

by Marie Lechler (Author)

Politics - Political Systems - General and Comparisons

53115

Summary

This paper investigates the effect of an exogenous demographic transition on democracy. As possible channels through which this influence makes an impact, education and per capita income and, to a lesser degree, urbanization were identified. These interdependencies were tested using pooled ordinary least squares as well as fixed effects models on the basis of panel data. In conclusion, the demographic transition affects democracy through the aforementioned channels primarily in poor countries that have experienced their demographic transition and subsequent democratization in the second half of the 20th century or later.

Excerpt

List of figures

Figure 1 The demographic transition ... 4

Figure 2 Life expectancies and birth rates ... 18

Figure 3 Consequences of the demographic transition ... 19

Figure 4 Determinants of democracy... 19

Figure 5 Development of democracy and demography ... 20

Figure 6 5-year average values of democracy scores and the demographic transition ...XVII

List of tables

Table 1 OLS model ... 22

Table 2 Country fixed effects ... 26

Table 3 Country and year fixed effects ... 29

Table 4 Interactions with income ... 31

Table 5 Time of demographic transition ... 34

Table 6 Summary of channel analysis... 37

List of Abbreviations

FE: Fixed effects

GDP: Gross domestic product

HAC: Heteroskedasticity-and autocorrelation- consistent

HR: Heteroskedasticity-robust

iid: independent and identically distributed

OLS: Ordinary Least Squares

OVB: Omitted variable bias

WDI: World Development Indicators

3SLS: Three Stage Least Squares

Introduction

"[...] in many ways demographic change can and should be seen as an essential factor of change

that has profound implications for society" (Reher, 2011, p.12).

The demographic transition

has been part of a global transition process that involved changes in

politics, economics and society in almost every country. These different processes all have

partially overlapping causes and consequences. Therefore, it seems obvious that these

movements of change are all interrelated, which is supported by an abundance of research on

causal relationships between economic growth and democracy as well as between economic

growth and the demographic transition. However, only few works focus on interdependencies

between the demographic transition and democratization, even though these two processes

happened roughly at the same time and are therefore likely to influence each other. Thus, the

goal of this paper is to analyze the relationship between the demographic transition and

democracy and the possible channels through which their influences take effect

First of all, the direction of causality has to be identified in this context. Dyson (2010) and Reher

(2011) classify the onset of mortality decline, which constitutes the starting point of the

demographic transition as an exogenous event. One might argue that the demographic transition

is linked to a country's health level, which in turn depends on a country's political system because

only in democratic countries medicine is distributed equally and investments in health are

undertaken. While this holds true in a not globalized world, in modern times basic health care is

provided through the international community. Hence, differences in the standard of health care

caused by the respective political systems are not large enough to cause a demographic transition.

Therefore, the direction of causation from democracy to demography can be neglected.

Democratization very much depends on factors such as education, income, urbanization and

women's empowerment, which can be identified as consequences of the demographic transition.

Hence, the dominant direction of causation seems to go from demography to democracy. The

demographic transition brings about the effect on these factors in the following way:

Characterized as transition from high mortality and fertility rates to low mortality and fertility rates.

Declining mortality rates (and thereby rising life expectancies) followed by falling fertility rates, eventually,

lead to a higher proportion of old people in society.

holding income constant

Higher life expectancies and fewer children per family increase investments in education and

thereby raise a country's educational level. Due to changing age structures and better health

conditions, more people are part of a country's labor force increasing its productivity and

eventually resulting in economic growth. Fewer children also support women's empowerment

since women have more personal free time besides caring for the household and can participate

in the labor force as well. Finally, changing age structures and higher life expectancies also lead to

urbanization: more people move to cities due to better employment opportunities and

improvements in the health level, which affect mortality rates in cities more than in rural areas

because in cities the danger of infectious diseases is much higher.

Furthermore, education, income, women's empowerment and urbanization affect democracy,

which is established

in most major works on democracy, as for example by Lipset (1959),

Huntington (1991) and Barro (1999).

Hence, it is likely that an exogenous demographic transition causes better education, higher

income, women's empowerment and urbanization, which in turn leads to democracy.

An empirical analysis therefore tests the hypotheses whether the demographic transition has a

statistically significant influence on democracy and, if that is the case, through which channels

this influence takes effect. For this purpose, panel data from more than 150 countries since 1800

are examined using different linear pooled ordinary least squares and linear fixed effect models.

In addition, interactions with income are tested and a channel analysis is executed. In order to

ensure the exogeneity of the demographic transition suitable control variables, most importantly

per capita income, are included.

Quantifying these effects is important because an advanced understanding of the determinants of

democracy facilitates more profound forecasts for democratization movements all over the world

and provides guidelines to influence these processes as policy maker. This is highly relevant since

many political instable African and Asian countries, such as Congo, Somalia, Afghanistan and

Yemen, are currently undergoing the demographic transition or have just completed this process.

The paper is organized as follows: the topic is introduced by first explaining the motivating

theory by giving an overview of the literature concerning the demographic transition and

determinants of democracy and by demonstrating the connection between these two subjects.

Based on the theoretical part the econometrical analysis subsequently follows and finally leads to

a conclusion about the stated hypotheses.

Motivating Theory

Many authors argue that the demographic transition is part of a global transition process not only

involving demographic but also social, economic and political changes

. This temporal parallelism

of change processes in economics, politics, demography and on the social level gives rise to the

assumption that they are all interrelated.

While the focus of previous research lay mainly on the relationships between economics and

democracy

or demography and economics

this paper focuses on the interdependencies between

the demographic transition and democratization processes. For this purpose the consequences of

the demographic transition and determinants of democracy are analyzed.

2.1.

The demographic transition

Thompson already assumed in 1929 that certain historical stages of nations are linked to their

regarding mortality and fertility rates. Notestein (1945) then developed a more detailed four-stage

model based on observations in the Western World. His findings demonstrate that mortality rates

start to decline at one point in the history of a country while fertility rates remain high, which

leads to population growth. With a delay, however, fertility rates start to decline as well and once

mortality and fertility rates both reach a low steady state the population stops growing. An

illustration of this process according to Sunde&Cervelatti

(2011, p. 103) is presented in figure 1.

MT denotes the onset of the mortality transition, which is succeeded by population growth. With

a time delay fertility rates start to decline as well (FT) and thus population growth slows down.

This process is called "demographic transition", which is defined in this paper by two criterions

that have to be fulfilled by a country in order to be classified as post-transitional

: the life

expectancy has to be above fifty and crude birthrates

below thirty. These criterions are two out

of three used by Sunde&Cervelatti (2011, p.107) in accordance with Chesnais' (1992, p.19)

norms. The third one, a sustained decline in fertility, is hard to quantify and left out because the

See, for example, Dyson (2010) or Reher (2011)

Barro (1996), Glaeser et al. (2004), Acemoglu et al. (2008),

Bloom,Canning&Sevilla (2001), Reher (2011), Lorentzen,McMillan&Wacziarg (2005),

Acemoglu&Johnson (2006), Cervelatti&Sunde(2011)

The figure reproduces Fig. 1.1 from Chesnais (1992) and Fig. 4.2 from Livi-Bacci (1992).

Post-transitional: Countries that experienced the onset of the demographic transition

Crude birth rates denote the number of births per 1000 people per year

criterion of crude birth rates below thirty is more restrictive and therefore ensures the satisfaction

of the third criterion as well.

Another definition of demographic transition is given by Reher (2004, p.21), who identifies the

starting point as "the beginning of the first quinquennium after a peak, where fertility declines by

at least 8% over two quinquennia and never increases again to levels approximating the original

take-off point" (Reher, 2004, p.21). The dates of the demographic transition computed by

employing above mentioned criterions as well as Reher's specification are presented in appendix

B.1.

Thus, a pre-transitional society with high mortality and fertility rates is rather young compared to

a post-transitional society that is characterized by higher life expectancies and lower fertility rates.

A society's changing age structure is considered as one of the most important features of the

demographic transition (Reher, 2011, p.14).

Figure 1 The demographic transition

Empirical studies confirm that a general pattern of an antecedent mortality decline and a

following fertility decline exists, even though the time lag between these two developments

differs across countries

. Reher (2004), for example, observed this demographic process in most

countries in the past 150 years and categorizes countries according to the date of their

demographic transition, whereby he identifies four groups. The first group constitutes the

"forerunners", whose fertility decline started before 1935 and which are mainly European and a

few American countries. The so-called "followers" are countries that experienced their fertility

decline between 1950 and 1964 and are either somehow influenced by the Europeans, via power

regimes or ethnicity, or countries that are distinguished because of their special regional position

such as India, Singapore and Japan. The fertility decline of the third group took place between

1965 and 1979 and therefore, this group is labeled "trailers", which includes the rest of Latin

America and some African and Asian countries. The last group is referred to as the "latecomers",

whose demographic transition started only after 1980 and which consists of some Asian and

See for example Coale (1975)

most of the African countries

. It is important to note that the general pattern of the

demographic transition has been the same in all countries - only the time of the onset and the

duration of the transition differ.

There is, however, no consensus about possible causes of the mortality decline because it

occurred worldwide under different circumstances and, thus, no one has succeeded in

establishing a general pattern, which could be employed to explain the occurrence of the

demographic transition in all countries yet. Therefore, some authors, such as Dyson (2010) and

Reher (2011)

, claim that the demographic transition occurs exogenously.

As opposed to this exogeneity assumption, one might argue that health care (and thereby the

occurrence of a demographic transition) is linked to a country's income and its political system.

That is, because only rich nations can afford medicine and only democratic nations have an

interest in distributing it, which would mean that the onset of the demographic transition

depends on a country's political and economic situation

. Globalization, however, raised

awareness for the health situation worldwide and international organizations as well as foreign

governments have started to provide basic health care for people in less developed countries.

Furthermore, globalization facilitates the adoption of new medical inventions and progress in

research so that even poor countries can benefit from the latest scientific achievements. This

means that in a globalized world a country's income and political system are not strong enough

to cause a demographic transition.

Thus, the argument that income or the political system have a significant effect on the

demographic transition might be valid for the 18

and 19

century- in modern times, however,

national income and democracy levels only play a minor role in determining a country's health

situation

Besides from income and the political system as the main threats to the exogeneity assumption of

the demographic transition, other factors such as education, women's empowerment and

See appendix B.1 for a summary of the Reher-groups

Canning (2011,p.3): "tackling the central thesis of the book [Dyson's Population and development,

2010] which is that the demographic transition is a largely self-contained process that proceeds

independently of social and economic development. The argument is that the mortality transition occurs

exogenously and is the cause of a subsequent decline in fertility "

Reher (2004,p. 12): The demographic transition "is considered as a largely autonomous process".

Franco et al. (2004) and Cutler et al. (2006), for example, argue that political institutions significantly

affect health and Pritchett &Summers (1996) state that income has a significant effect on health.

Smith (2003) and Adams et al. (2003) find that changes in income and lagged values of income do not

predict changes in health.

Christopher Martyn questions the strength of the evidence for politics being a determinant of health in

Franco's paper (2004) (p.1423)

urbanization might still be correlated with the occurrence of the demographic transition.

Therefore, the empirical models account for these factors. Hence following analyses consider the

demographic transition as a predominantly exogenous event.

2.2.

Democracy

There exist a variety of definitions of democracy and the most common ones in recent literature

are based on Schumpeter's (1947) characterization

, such as, for example, Huntington's

(1991,p.6) description: "The central procedure of democracy is the selection of leaders through

competitive elections by the people they govern". He points out the significance of a free and fair

election process in order to show the importance of a high participation rate to achieve a

"people's rule"

Lipset (1959), in accordance with Schumpeter (1947) and Weber (1946), defines three conditions

that classify a democracy: Firstly, a "political formula", which is a value system that legitimizes

the system, specifies institutions and is accepted by all citizens, is necessary. Secondly, one set of

political leaders in office is as important as, thirdly, several sets of political leaders out of office

that form an opposition. Furthermore, "opportunities for changing governing officials" (p.71)

have to be allowed and the "largest possible part of the population" (p.71) has to be able to

influence political decisions. He thereby underlines not only the necessity of a balanced

distribution of power to avoid conflicts and autocratic movements, but also the necessity of equal

and free participation opportunities for the citizens.

The concepts of freedom along with equality among all citizens appear in most work about

democracy and are therefore the underlying definition applied in this paper. The criterions to

quantify this definition are discussed in the empirical part.

In 2011, 87 countries, representing 43 percent of the global population, are considered

democracies, while 48 countries, representing 35 percent of the world's population, are classified

as "not free" according to Freedom House

. The degree of freedom and democratization in the

"The democratic method is that institutional arrangement for arriving at political decisions in which

individuals acquire the power to decide by means of a competitive struggle for the people's vote" (as cited

in Barro, 1999, p. 160).

"Democracy" comes from the Greek words

(dmos) meaning "people" and (kratos)

meaning "power"

The number of countries qualifying as partly free stood at 60 and they were home to 22 percent of the

world's total population (http://www.freedomhouse.org/report/freedom-world-2012/full-report-essay).

Freedom House is a US-based non-governmental organization that supports democratic change, monitors

freedom, and advocates democracy and human rights around the world.

world is higher than ever before in history. But still, more than half of the world's population

lives in unfree or only partially free countries. Questions regarding reasons for democratization

movements are often raised in this context, for example: which factors determine democracy and

the different timing of democratization processes?

The temporally different occurrence of democratizations is examined most famously by Samuel

Huntington, who identifies three different democratization waves

, each succeeded by reverse

movements. The first wave had its origins in the American and French revolution and took place

during the relatively long period between 1828 and 1926 mainly in Europe, but also in North

America and in a few Latin American countries. The second one occurred after World War II,

when Allied occupation promoted democratization processes, most of Latin America

democratized and the end of Western colonial rule produced new states, some of which became

democratic as well. The third wave started in 1974 and includes many democratization processes

in Latin America and South and Eastern Europe after the collapse of the Soviet Union

(Huntington, 1993, p.13 f.)

An abundance of authors addressed the question about causes for democratizations and detected

determinants reaching from economic to historical and social factors. Most major works on

democratization- except Acemoglu et al. (2008)- agree that economic factors are favorable for

democracies. They, however, have not reached a consensus concerning the exact pattern of these

effects

Other discussed determinants of democracy include education, health, social institutions, religion,

historic factors (such as, for example, a colonial history), urbanization, ethnologic fragmentation

and geography

. Analyzing all these factors would go beyond the scope of this paper, and

therefore the focus in following sections lies on factors that are at the same time considered as

possible consequences of the demographic transition.

"A wave of democratization is a group of transitions from nondemocratic to democratic regimes that

occur within a specified period of time and that significantly outnumber transitions in the opposite

direction during that period of time"(Huntington, 1993, 15)

See appendix B.2 for a summary of countries belonging to the different democratization-waves

See Lipset (1959), Huntington (1991), Rusechemeyer,Stephens&Stephens (1992) or Barro (1999)

Lipset (1959), Huntington (1991), Barro (1999), Papaioannou and Siourounis (2006), Glaeser et al.

(2007), Hegre et al. (2012)

2.3.

Interdependencies between the demographic transition and democracy

Since the demographic transition and democratization processes often happened roughly at the

same time, it is surprising that only a limited amount of literature focuses on the political

consequences of demographic transitions while many authors examine the effects on the

economy and on society.

As explained in section 2.1, the occurrence of a demographic transition is, in modern times,

largely independent from the political system. Thus, the following section analyzes reasons and

possible channels through which demography influences democracy. While the reverse direction

of causation cannot be ruled out completely, the causation from the demographic transition to

democracy is considered as the dominant direction.

As one of the few authors who addresses the political implications of a demographic transition,

Dyson (2010) points out the higher confidence people have in their future after the demographic

transition and the resulting increased awareness for political matters. "The rise in the number of

years that they could reasonably expect to live, surely had an influence in helping people to think

more about issues of justice and political equity" (p. 202). Moreover, he emphasizes certain

outcomes of the transition such as urbanization and population ageing that eventually lead to

democratization.

Another approach was developed by Cincotta (2007), who argues that political systems in pre-

transitional, young societies are more likely to be instable than in post-transitional societies. This

youth bulge argument, derived from civil conflict research

, is connected with the logic of

authoritarian bargains

in order to explain the occurrence of authoritarian regimes in pre-

transitional societies. That is, before the demographic transition political instability is more likely

to occur due to the young age structure of society and because of this insecure environment

people are willing to exchange political rights for security. Hence, democracy is less likely to arise

in pre-transitional than in older, post-transitional societies. This argumentation is based on the

assumption that if people do not have a reason (in this case higher levels of security) to call for an

authoritarian regime the chances for democracy increase. Cincotta's approach, therefore, rather

focuses on the determinants of authoritarian regimes than on the determinants of democracy.

See Goldstone (1991, 2001) and Collier (2000) for theoretical explenantion and Urdal (2006) for

empirical evidence

"The social contract in dictatorships is commonly explained as an "authoritarian baragain" between

rulers and citizens by which citizens relinquish political rights for economic security" (Desai, Olofsgard,

Yusuf, 2009, Abstract)

This paper, however, focuses on the direct effects of the demographic transition and its

consequences on democracy and consequently follows Dyson's approach (2010). It is likely that

longer time horizons and more life experience promote democracy because people have a

broader array of perspectives and are able to evaluate a political system more critically. In

addition, the longer people expect to live and work in a society the more they want to participate

in the political system that sets the general framework for how society works. Furthermore, more

life experience also makes people more familiar with different political systems and the respective

advantages and disadvantages. Thus, a movement towards democracy is more probable in

societies with higher life expectancies than in others.

Besides from the effect of higher life expectancies on democracy, consequences of the

demographic transition such as education, urbanization, women's empowerment and economic

growth also play an important role since they are at the same time determinants of democracy.

There might also be other factors that connect the demographic transition and democracy. The

aforementioned ones, however, seem to be the most significant ones

and therefore the focus in

the following course of this paper will lay on these four.

In order to deduce these relationships, the subsequent sections explain these factors with respect

to the effect the demographic transition has on each one of them and the influence of these

factors on democracy.

2.3.1.

Education

Lower fertility rates and higher life expectancies do not only change the structure of society as a

whole, but also family structures. Fewer children per family increase the share of disposable

income for each child's education and higher life expectancies increase the return on investments

in education. Declining mortality rates also increase the incentive for societal investments in

education because society benefits from an educated labor force for a longer time period. Bar and

Leukhina (2011) argue that lower mortality rates lead to better knowledge transmission because

individuals are carriers of ideas, which also contributes to a higher level of education in post-

transitional societies than in others. Empirical studies support the positive relationship between

the demographic transition and education as well (e.g. Lorentzen, 2005).

The second part of the argument - the influence of education on democracy - is a rather old field

of study. John Dewey argued in favor of education to obtain democracy as early as 1916 because

in educated societies people understand political contexts better, are encouraged to think about

different forms of governance and question critically the current political situation. In the past

fifteen years, however, a passionate debate about the empirical evidence for this relationship has

arisen. Barro (1999), for example, states in his study about the origins of democracy that the

propensity for democracy rises with years of schooling. Even though Acemoglu (2005) criticizes

Barro's and other's studies for using wrong models

and, in his analysis, finds no evidence for a

link between education and democracy, many other authors succeeding him, who use revised and

more sophisticated models such as Glaeser et. al (2006), Papaioanou et al. (2008),Wacziarg (2011)

and Hegre el. al (2012), support the idea of a causal relationship between education and

democracy theoretically as well as empirically.

Hence, democracy is very likely to occur in more educated societies. After a demographic

transition people invest more in education, a better knowledge transfer takes place and more

people have more time to study so that better education is a direct result of this transition and

thereby is one element that connects the demographic transition and democracy.

2.3.2.

Urbanization

"Any account of the demographic transition that fails to include urbanization as one of its major

components is seriously incomplete" (Dyson, 2011). Studies on urbanization often refer to

economic changes to explain a drift towards cities. Mortality rates and population growth,

however, are an important determinant of urbanization as well. Therefore, de Vries (1990)

developed the ,,stylized sector-specific model of the demographic transition" and its implications

for urban growth. In pre-transitional times, death rates in urban areas are usually higher than in

rural areas because infectious diseases, communicated by contagion in confined space, were the

main cause for high mortality rates. The demographic transition then reduced mortality rates

through better health care, with the result that the urban mortality rate fall more rapidly than the

rural mortality rate. Thus, the urban population increased faster than the rural population as long

as the birthrate was higher than the death rate. Once birth and death rates reached the same level,

the process of the demographic transition was completed and the result was an increase of the

urban population. Another connection between the demographic transition and urbanization is a

temporary strong population growth in general, which does not only contribute to relative faster

growth of cities compared to rural areas but also to new city foundings, resulting in absolute

urban growth. Empirical evidence for the relationship between the demographic transition and

urbanization is given by Woods (2003). In addition, Dyson (2010, 2011) and Canning (2011)

establish a similar argumentation and agree that mortality decline increased the urban population.

According to Acemoglu country and time fixed effects are crucial for regressions that estimate the effect

of education on democracy.

Urbanization as a determinant of democracy is extensively discussed since "democracy made its

first effective appearance in the Greek city states" (Laski, 1937, p. 76). Max Weber (1950, p. 315)

characterizes cities as a certain type of political community, which is confirmed by Lipset's

analysis about the requisites of democracy (1960)

. One of the main arguments in this discussion

is that people in cities can organize themselves more easily and have a better notion of

inequalities and the political situation, which promotes exercising political rights and democratic

movements. Moreover, cities are characterized by a growing middle class

, which is often

identified as an important component of democracy (Lipset, 1959).

Dyson (2010) emphasizes the different distribution of political power in cities, which is promoted

through new administrative and governance structures that become necessary in urban areas. But

he also argues that democracy can only arise in moderate growing cities because cities growing

too quickly, which have to deal with space problems, involve the danger of civil conflict and

political unrest.

Barro (1999), on the other hand, claims that according to his empirical studies democracy tends

to fall in line with urbanization, but does not give a profound theoretical explanation for this

negative relationship. Therefore, these results could have either occurred due to theoretical

explanations, which have not been covered so far

or due to estimation errors. Since the majority

of authors, however, argue in favor of a positive relationship between urbanization and

democratization this paper follows this approach.

Urban governance structures, a broader middle class and better communication facilities than in

rural areas all have a positive effect on democratization. Thus, urbanization can be seen as

another outcome of the demographic transition that causes democratization.

2.3.3.

Women's empowerment

Declining fertility rates have a huge impact on women's lives because caring for fewer children

gives them more time to spend, for example, at school or at work. Being more educated and

pursuing a profession also goes along with becoming independent, self-confident and accepting

social and political responsibilities. There are many empirical studies that find a large negative

effect of a high fertility rate on female labor force participation (Bloom, Canning, Fink, Finlay,

2009) and on female economic and political empowerment (Canning, 2010). Dyson (2001, 2010)

See also Mumford (1995, p.21) and Amin & Thrift (2004, p. 231) and their argumentation in favor of a

positive correlation between cities and democracy

The middle class grows in cities extraordinary fast due to the economic structure of cities (new type of

occupations are available)

For example that autocratic regimes can control cities easier than other areas

also claims that fertility and mortality declines lead to a reduction in gender differentiation and

higher female autonomy.

Women's empowerment contributes to democratization because equality and broad participation

are its prerequisites. Barro (1999) agrees with this position by stating that "democracy is also

negatively and significantly related to the gap between male and female primary attainment",

meaning that higher levels of democracy can be reached in more equal societies. Waylan (1996)

emphasizes the substantial role of women in bringing about the collapse of authoritarianism in

Latin America and Eastern Europe.

Consequently, the demographic transition, particularly fertility decline, promotes women's

empowerment, which in light of higher equality among the citizens determines democracy.

2.3.4.

Economic growth

There are several arguments in favor of a positive influence of the demographic transition on

economic growth. Higher life expectancies and more people in an employable age increase the

labor force, and it becomes more productive through higher health levels (Bloom, Canning,

Sevilla, 2001). Lorentzen et al. (2005) argue that high pre-transitional mortality rates reduce

economic growth because they shorten time horizons and lead to risky behavior and lower

investments in physical and human capital. They also see mortality rates as a source of the

poverty trap because poor health conditions and a weak economy reinforce each other. Hence,

post-transitional societies are characterized by better prerequisites for economic growth. Not

only Galor and his Unified Growth Theory (2011), but also Canning (2011), in accordance with

Dyson (2010) and Dahan & Tsiddon (1998) suggests that the demographic transition played a

major role in the emergence of economic growth, primarily because of mortality decline and age-

structural changes. This relationship was questioned by Acemoglu & Johnson (2006), who do not

obtain evidence that large increases in life expectancy lead to increases in per capita income.

Sunde&Cervelatti (2011), however, find in post-transitional times a positive relationship of life

expectancy on economic growth, even though the effect before the demographic transition is

ambiguous. Hence, according to the overwhelming majority of literature, economic growth is at

least partially determined by the demographic transition.

The tendency that richer countries are often more democratic can be observed worldwide. If

there is a direct connection between income and democracy is, however, controversial. While

Acemoglu et al. (2008) did not find evidence for a causal relationship in empirical studies, Barro

(1999), for example, did. Most major works on democracy (Lipset,1959, Huntington 1991,

Rueschmeyer/Stephens/Stephens, 1992, Tavres/Wacziarg, 2000, Murtin/Wacziarg, 2011)

consider economic performance as a determinant perhaps even the main one. They argue that

wealth is a prerequisite for intelligent participation in political processes since people have the

ability to think about broader questions, such as governance systems, as they are usually better

educated. It also changes the social position of workers and strengthens the middle class, which

has a positive impact on civic participation. Economic growth also weakens the power of a small

economically and therefore often politically leading class and raises the influence of the working

class.

Hence, the demographic transition promotes economic growth, which is a determinant of

democracy so that income is, besides education, urbanization and women's empowerment, a

fourth channel through which demographic transition and democracy are connected.

Accordingly, this analysis yields two hypotheses, which will be examined in the empirical part of

this paper

(1.) The demographic transition has a positive influence on the rise of democracy.

(2.) The effect of the demographic transition on democracy works primarily through the channels

of education, women's empowerment, urbanization and economic growth.

Data and descriptive statistics

3.1.

Data

In order to support these hypotheses the following section provides an empirical analysis based

on different linear panel data models for more than 150 countries over the past 200 years. Panal

data are advantageous compared to cross-sectional or time-series data because they ,,usually give

the resarcher a large number of data points, increasing the degrees of freedom and reducing the

collinearity among explanatory variables-hence improving the efficiency of econometric

estimates" (Hsiao, 2003, p.3). Moreover, panel data are particularly useful to analyze the dynamics

of change regarding demography and democracy across different countries. There are, however,

also limitations of using panel data, such as sample selection bias because data availability might

not be equal across countries and years.

Demographic data, such as life expectancy and fertility rates, were taken from the World Bank's

world development indicator database (WDI) and are available since 1960. This database also

contains statistics on education, urbanization, female labor force participation and GDP. GDP

and other economic variables were also drawn from Acemoglu&Johnson (2007) and Banks' cross

national time series database

. As another measure of education, the Barro-Lee dataset of

educational attainment in the world is used, which provides data about average years of schooling

in 5-year intervals from 1950 until 2010. As measure for democratization, Polity IV data

as "the

most widely used data resource for studying regime change and the effects of regime authority"

are employed, which cover the time span from 1800 to 2010 for more than 150 countries. A

detailed description of all variables and sources is given in appendix A.

3.1.1.

Demographic data

The most important demographic data are mortality and fertility rates in order to estimate the

date of the demographic transition. As one measure, a binary variable labeled demographic

transition ("demotran") was created, which turns 1 if life expectancy is higher than fifty and

crude birthrates fall below 30/1000. If one of these criterions is not met the variable stays 0. Life

This database was launched by Arthur Banks in 1968 at the State University of New York at

Binghampton and provides data for more than 200 countries from 1815 until 2007 (Arthur S. Banks,

"Cross-National Time-Series Data Archive (CNTS) 1815-2007", http://hdl.handle.net/1902.1/11448

Databanks International [Distributor] V1 [Version])

The Polity IV Project is is under the direction of Dr. Monty G. Marshall and supported by the Political

Instability Task Force, Societal-Systems Research, and Center for Systemic Peace.

http://www.systemicpeace.org/polity/polity4.htm

expectancy as taken from the World Bank dataset is defined as "number of years a newborn

infant would live if prevailing patterns of mortality at the time of its birth were to stay the same

throughout its life"

and crude birth reflect the number of live births occurring during the year,

per 1,000 population and are estimated at midyear. As the World Bank data are only available

since 1960, all analyses including the binary variable "demotran" only take

into account countries

that experienced their transition after 1960.

Data about the onset of fertility decline from Reher's analysis (2004)

are taken as another

measure for the demographic transition.

The difference between these two measures amounts to 15 years on average with a standard

deviation of 10.3, which is due to the fact that Reher's data underlies a different definition for the

demographic transition than the one applied for the World Bank data. Also, the data of the

World Bank only start in 1960 while Reher's data go back to 1900. Thus, only data for countries

that experienced their demographic transition after 1960 can be compared, which are mainly

African, Asian and some Latin American countries (whose data are less accurate). Taking this

into consideration, the two measures from completely different datasets are quite close in terms

of the time horizon they reflect.

In addition, the time difference between the present and the time of the demographic transition

(yearssincedt)

were calculated on the basis of Reher's data. For summary statistics of the

demographic data see appendix C.

In the following course of the analysis WDI data underlie the binary variable "demotran" and

Reher's data are the basis for the continuous variable "years passed since (pending to) the

demographic transition". It is important to keep in mind that the variables reflect different time

horizons

and different meanings. While the binary variable "demotran" measures the effect of

the occurrence of the demographic transition (in the past) on democracy today, the continuous

variable represents the effect that years passed since or pending to the demographic transition

have on democracy today. Thus, the results from these different strategies to examine the stated

hypotheses have to be interpreted with respect to their respective time horizon and meaning.

http://data.worldbank.org/indicator/SP.DYN.LE00.IN

Using data from UN Demographic Yearbook Reher defined onset of fertility decline as follows: It "has

been set at the beginning of the first quinquennium after a peak, where fertility declines by at least 8%

over two quinquennia and never increases again to levels approximating the original take-off point"

(Reher, 2004, p.21)

This measures contains negative values if the demographic transition lies in the future an spositive

values if a country has already undergone the demographic transition.

WDI 1960-2011 and Reher 1865-2000

Details

Pages
Type of Edition: Erstausgabe
Year: 2014
ISBN (eBook): 9783954897582
ISBN (Softcover): 9783954892587
File size: 1.5 MB
Language: English
Publication date: 2014 (April)
Keywords: demographic transition democracy econometrical analysis

Author

Marie Lechler (Author)

An econometrical analysis of the interdependencies between the demographic transition and democracy

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Author

Marie Lechler (Author)