Social classes, demographic transition and economic growth

This paper analyzes the role of the demographic transition in the emergence of sustained economic growth, and shows that these two processes are relat ed. Unlike previous contributions which have focused on the importance of h uman capital, this paper suggests that capital accumulation, and the existe nce of different social classes may provide an alternative explanation for the observed pattern of output, fertility rates and wages during the 19th c entury. The framework presented shows that during the first phase of indust rialization, a decline in capital-labor ratio reduces the wage rate and inc reases the dependency of the family unit on child labor, increasing fertili ty rates. However, in later phases the increase in the capital-labor ratio, due to the saving of the business dire, reduces the necessity of child lab or bringing about the demographic transition. (C) 2001 Elsevier Science B.V . All rights reserved.