On Investment in Human Assets

At the family level, the capacity to plan the number and timing of childbirths can dramatically affect household economic well-being through improved maternal and child health, and more productive use of time, human energy and income.¹⁴ Women stand to increase earnings the most, although their low status in many societies often limits this opportunity. Research conducted in many developing countries demonstrates that children in large families tend to be less well-nourished over the long term,¹⁵ which can undermine school performance and, hence, future earnings potential.¹⁶

In general, economists conclude that parents with fewer offspring are able to invest more in each child than those with larger families. Studies show that, on average, children from smaller families attain higher levels of schooling. These findings are strongest in those developing countries that have experienced substantial economic and social transformation in recent decades, including many in Southeast Asia and Latin America. However, it is more difficult to demonstrate such changes in educational attainment in many countries in Africa and South Asia, where students draw upon large extended families for school fees and other assistance.¹⁷ Notably, family size does not appear to influence school enrollment. Enrollment appears more closely related to the commitment of governments to universal education.¹⁸ And for girls, the cultural background of parents is likely to affect the percentage of school enrollments.

High proportions of school-age children, characteristic of countries experiencing rapid population growth, undoubtedly put pressure on existing school and health care facilities. When school enrollments and average educational attainment increase rapidly, governments can expect upward pressure on national education budgets. In the absence of even more rapid growth in government revenues or major shifts in government spending priorities, this tends to depress public education expenditures per student. Yet most developing countries do shift priorities, continuing to make substantial gains in schooling and health despite the budgetary pressures.¹⁹ Clearly, something must be sacrificed. One cross-national study found that teachers¹ salaries appear to have suffered as school enrollments grew rapidly in the developing world during the 1960s and 1970s.²⁰ It is not clear that developing countries can sustain these trends‹rising enrollments, higher average educational attainments, increased public health care service‹without sacrificing other priorities as their populations continue to grow.

The rate of population growth and the size of annual growth increments matter. Even in the case of countries that can adjust to their present rates of population growth, economists recognize that it takes time and effort for government and other institutions to expand urban infrastructure, provide new and better health and educational services, successfully integrate technology, enforce environmental regulations and expand trade. Developing countries in which population growth eases through declines in birthrates will be more likely to increase per capita economic growth rates and will have more time to generate needed jobs.²¹