Population Growth

1
Population Growth

• The Data 1620 2,302
• 1700 250,000
• 1720 500,000
• 1740 1,000,000
• 1776 2.5 million
• 1820 10 million
• 1914 100 million
• Today  293,238,779 (as of this morning)
• Growth rates 17th century gt5 per year
• 18th, 19th century 3 per year
• 20th century lt 2, peak of 1.75 for the baby
  boomers

2
Birth Rates

• Maximum birth rate 60 per 1,000 persons
• 1800 55 per 1,000 persons
• 1900 30 per 1,000 persons
• Today gt 20 per 1,000 persons

3
Why were birth rates higher in the 19th century?

• Lower median age
• 15.9 in 1790
• 19.4 in 1860
• 34.0 today
• Abundant land
• Urban fertility rates were lower than rural
  fertility rates. Why?
• Children are durable goods. Urban residents have
  more choices in consumption.
• Children are investment goods. Children had a
  greater return on farms then they did in urban
  settings.

4
Why did birthrates decline?

• Decrease in arable land increased the cost of
  bequests to children.
• Increase in settled land led to an increase in
  capital gain from settled land. This lead to a
  decline in the number of children needed to
  provide for retirement.

5
Colonial Factors of Production

• Land is in abundant supply.
• Labor produces capital.
• Labor thus is the binding constraint on colonial
  development.

6
Free Population and Indentured Servants

• Free population comes for two reasons
• Religious Freedom
• Economic opportunity
• Indentured Servants
• Problem Labor supply exists in Europe, labor
  demand in North America. Who is to pay the high
  cost of passage?
• Solution Indentured servants, who sell their
  labor for the right to passage. Contracts
  (indentures) were fixed before departure. The
  shipper then sold the contract upon arrival in
  North America. Hence, all the risk fell on the
  shipper.

7
Who were the indentured servants?

• Historical view Social refuse.
• David Galensons view
• Majority are males (4 to 1)
• Ages late teens, early twenties.
• Hence, the most productive labor is leaving
  Europe. The European countries, however, bore
  all the cost of child rearing. In other words,
  this is best described as a muscle drain.
• Literacy rates compared favorable to the rate in
  Britain.
• Finally, indentured servants over time
  increasingly were
• skilled labor, not unskilled labor.

8
How was the length of the contract determined?

• Galensons view Competition led to the
  adjustment of the length of indentures so that
  the expected sale price was just equal to the
  cost of passage.

9
Another view of contracts

• Farley Grubbs view
• Price variation in Philadelphia suggests the
  efficient market hypothesis is not appropriate.
• Theory Price f(sex, literacy, occupation)
• Evidence Price is not a function of observable
  characteristics.
• NOTE INSIGNIFICANCE CAN BE SIGNIFICANT
• Why? Supply is in Europe, demand is in North
  America.
• How well should a market separated by thousands
  of miles function?

10
The move to slavery

• Three sources of labor Free, servants, slave
• At low wages only free labor exists. As wages
  rise, indentured servants increasingly wish to
  come to America.
• As wages rise to cover the cost of passage, labor
  eventually consists of only slaves.
• As the cost of passage falls, slaves are easier
  to import and Europeans are less likely to sell
  their labor via the indentured contract. Hence,
  indentured servants disappear primarily due to
  improvements in shipping.

11
Redemptioners

• Redemptioners - immigrants borrowed the cost of
  transportation and agreed to sell their labor
  upon arrival to pay off the debt.
• Hence, labor assumed the risk of the contract,
  rather than the shipper.
• Why would labor agree to a contract that shifted
  risk to themselves?
• Choice of masters.
• Allowed families to remain together.

12
A bit on slavery

• Unlike indentured servants, slaves had no legal
  rights and were entirely subject to their owners.
• Slave prices were higher than indentured
  servants. WHY?
• Slavery was eliminated peacefully in the British
  empire, but not till after the American
  Revolution
• Slavery will be discussed in detail later in the
  course.

13
Immigration

• Source if Immigration
• Irish and German 1840-1860
• Central Europe, Italy, Russia 1900-1914
• Cubans 1960s
• Vietnamese, Soviet Jews 1970s
• Push factors
• Religious and civil repression
• Poverty, Hunger, Lack of economic opportunity
• Pull factors
• Cheap land
• High wages
• Social equality (??)
• Religious and civil freedom
• Which factor dominates The research of Jeffrey
  Williamson (STUDENTS READ)

14
What did immigration mean for the U.S.?

• Francis Walker (19th century economist,
  statistician, and president of MIT)
• Maximum rate of population growth existed in the
  U.S.
• Each European immigrant replaced a native
  American
• Hence, immigration can be thought of as a cost to
  the U.S.
•  Paul Uselding
• Maximum rate of population never existed
• Each immigrant represented a capital transfer,
  since the cost of raising the migrant was born by
  Europeans, not Americans. In other words, the
  human capital investment was made in Europe,
  American realized the gains from the investment.
• By 1859, the additional capital formation from
  immigration represented 5 to 10 of GNP

15
More on immigrations impact

•  Uselding and Larry Neal
• From 1790-1912, additional capital stock from
  immigration equaled 10-20 of GNP
• Robert Gallman
• Noted that immigration was mostly urban. Hence
  the birth rate of native born Americans was
  higher than it would have been otherwise since
  the migration of Americans to the cities was less
  than what it would have been.

16
A bit more on slavery

• The Slave Issue Why did Europeans settle in the
  North or West and not the South?
• African immigration basically stopped in 1820
• By 1860 99 of Africans in the U.S. were natives
• Higher percentage of Africans were natives than
  Europeans
• Slavery as an institution ended in the British
  Empire and the Northern United States.
• Prior to Eli Whitneys cotton gin, cotton
  production was not possible on a large scale in
  the South. Gradually slavery was dying in the
  South also.
• The growth of cotton led to a significant growth
  in slave labor. Did this impact the pattern of
  European migration?
• Although Europeans may have had a greater
  distaste for slave labor, the attraction to the
  North was because jobs in manufacturing were more
  desirable and plentiful.

17
Background on Slaves

• No legal rights
• to marriage
• to property
• to children
• increase in population comes only from native
  population after 1808. As noted, the vast
  majority of the African-American population was
  native born

18
The Civil War

• Why fight the war? The argument over slavery.
• Remember, cotton production was migrating to the
  West. Would slavery be allowed in the new
  Western territories?
• Furthermore, who would compensate the South if
  slavery was declared illegal?
• Note The North did not have an economic interest
  to end slavery.

19
Was the War Necessary?

• Could slavery be abolished without war?
• Federal government purchasing slaves immediately
• Gradual freeing of slaves over time.
• Was integration of society a goal of the
  abolitionists? In general, no.

20
The Cost of the War

• Claudia Goldin and Frank Lewis estimate the
  direct Northern cost at 3.4 billion and the
  direct Southern cost to be 3.3 billion.
• Lost human capital -
• Estimating the economic value of the 600,000 who
  died
• North - 1.06 billion
• South - .767 billion
• Direct government expenditure
• North - 2.3 billion
• South - 1 billion
• Physical destruction in the South 1.5 billion

21
6.7 billion is worth...

• 6.7 billion is
• double the total exports of the U.S. from
  1850-1860.
• double the national income in 1860
• four times the sum of all government expenditure
  from 1789-1860
• 6.7 billion is enough to
• purchase the slaves from all slave owners at 1860
  prices and...
• give each slave family 40 acres and a mule
  and....
• still have 3.5 billion left for reparations.
• In other words, the North could have used their
  expenditure to pay the South to end slavery
  peacefully.