Income-Related Differences in Natural Increase: Bearing on Growth and Distribution of Income

Publisher Summary This chapter discusses a feature of demographic growth widely observed in both developed and less-developed countries—the marked differences between the higher rate of natural increase in the lower income groups and the lower rate in the upper income groups. The negative association between rates of natural increase and initial secular income levels poses a major problem if wider inequality in the size distribution of income is to be avoided. This is because lower income levels of parents mean proportionately lower investment in quality of the descendants and, hence, possibly lower growth rates in the per-capita income of the lower income groups and their descendants. The magnitude of the problem and of the necessary compensating offsets is clearly a function of the differential spread in the rates of natural increase and of the initial differences in income levels of parents. If no offsets are provided, all other conditions being equal, the negative association between rates of natural increase and initial income levels would result both in the widening of income inequality and the probable keeping down of the growth rate of aggregate income per unit.