Religions, Fertility, and Growth in South-East Asia David de la Croix1 and Clara Delavallade2 1 IRES, Universit´ e catholique de Louvain 2 IFPRI, Washington December 16, 2014 Introduction Auxiliary Structural Counterfactuals Conclusion Research Question Many religions are supposedly pro-natalist In most models of the long-run (Malthus, Solow, Lucas), high fertility is detrimental to growth How big is the effect of religion on development through its effect on fertility? How to identify the possible effect on fertility ? How to go from the micro to the macro implications ? 2 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Literature Microeconometric literature showing some effect of religious affiliation on fertility or education Adsera (Pop. Stud. 2006), Berman et al. (NBER, 2012), Becker and Woessmann (QJE, 2009), Baudin (2014), Chab´e-Ferret (2014) do not draw quantitative macro consequences Growth/development models with religion Cavalcanti et al. (2007, ET), Strulik (2014), Cervellati et al. (2014) Show how religious norm emerge and affect preferences do not identify the size of effect using microdata do not particularly focus on fertility Growth empirics Cross-country regressions (Barro and McCleary, AJS, 2003) are not robust (Durlauf et. al. JAE, 2012) 3 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Our approach Full journey from micro estimates to macro simulations a) Auxiliary model. Estimate empirical relationship between fertility and parental background: religion and education from census data. b) Structural model. Micro model of the household. Identify preference parameters to fit the findings of the auxiliary model. c) Counterfactual analysis with growth model. 4 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Our sample: South-East Asia 5 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Religious Composition South-East Asia: Common geographical and cultural influences Different religions present in same region of the world Best place to distinguish country fixed effect vs religion fixed effect Main religions in each country: Cambodia Indonesia Malaysia Philippines Vietnam Thailand No Buddh. 0.7 0.3 80.7 0.1 96.9 1.1 24.3 0.1 10.8 95.4 Hindu 2.4 6.7 Muslim Cath. 2.1 87.1 54.2 4.5 0.0 3.7 0.4 2.3 2.6 83.4 5.4 0.7 Prot. 5.8 10.6 0.5 Growth 1950-08 2.9 3.0 3.3 1.7 2.6 4.2 6 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Data Census data (IPUMS international, various years) Complete fertility Ni of married women aged 45-70, mother’s education Eif , father’s education Eim , mother’s religion Rfi census fixed effect Ci birth year fixed effect Bi Five levels of education: (i) No school, (ii) Some primary, (iii) Primary cmpl., (iv) Secondary cmpl., (v) University cmpl. → 25 types of couples Eif × Eim Seven religions Rfi : No religion, Buddhist, Hindu, Muslim, Catholic, Protestant, Other 7 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Methodology Pooling different censuses allows to interact the education dummies with the religion dummies → Allows for differential effects of religion depending on the education level Cambodia Indonesia Malaysia The Philippines Vietnam Thailand 1900 1910 1920 1930 1940 1950 1960 8 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Distribution of Education Educ. Women (i) (ii) (iii) (iv) (v) Total (i) No schooling 155,029 13,978 2,235 100 17 171,359 (ii) Some primary 89,151 109,132 16,874 1,058 117 216,332 Education Men (iii) (iv) Primary Secondary completed completed 24,542 1,392 38,078 4,930 55,567 14,065 5,234 12,779 936 3,568 124,357 36,734 (v) University completed 113 541 2,097 3,834 6,581 13,166 Total 270,227 166,659 90,838 23,005 11,219 561,948 Note: unweighted 9 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Auxiliary model A. Benchmark: Ni = β1A Ri + β2A Eif × Eim + β3A Bi + β4A Ci + A i Eif × Eim : vector of 25 categorical variables B. Effect of religion varies by education level: Ni = β2B Ri × Eif × Eim + β3B Bi + β4B Ci + B i Ri × Eif × Eim : vector of 7 × 25 = 175 categorical variables 10 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Estimated Fertility by Education groups Model A - Fertility of Women born 1945 in the Philippines (No relig. Eim f Ei (i) (ii) (iii) (iv) (i) 4.25 + 0.91 4.78 + 0.91 4.66 + 0.91 4.54 +0.91 (ii) 4.90 + 0.91 4.82 + 0.91 4.70 + 0.91 4.33 +0.91 (iii) 4.26 + 0.91 4.65 + 0.91 4.36 + 0.91 4.09 +0.91 (iv) 4.23 + 0.91 3.89 + 0.91 3.52 + 0.91 3.42 +0.91 (v) 3.28 + 0.91 2.99 + 0.91 2.75 +0.91 + Catholics) 4.16 3.77 3.39 3.12 2.83 (v) + 0.91 + 0.91 + 0.91 + 0.91 + 0.91 11 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Effect of Various Religions Buddhists Hindus Muslims Catholics Protestants Other religions fixed effect 0.331 0.218 0.560 0.914 1.040 0.675 s.e. (0.0725) (0.1127) (0.0907) (0.0461) (0.0803) (0.1113) All religions increase fertility significantly (except Hindus) Muslims Catholics > Buddhists Protestants > No religion Hindus 12 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Fertility according to Model B Model B - Fertility of Women born 1945 in the Philippines (No relig. + Catholics) Eim f Ei (i) (ii) (iii) (iv) (v) (i) 5.58 – 0.43 5.71 + 0.36 5.01 + 0.64 3.83 + 1.34 (ii) 4.92 + 0.90 5.22 + 0.69 4.72 + 1.06 4.18 + 1.13 3.67 + 0.88 (iii) 3.78 + 1.56 4.31 + 1.49 4.01 + 1.29 3.65 + 1.18 3.13 + 0.89 (iv) 5.08 – 0.27 3.37 + 1.19 3.22 + 1.13 2.88 + 1.16 2.58 + 1.21 (v) 2.40 + 1.45 2.09 + 1.42 2.43 + 0.99 2.31 + 1.01 ⇒ The gradient of the relationship fertility/education depends on religion Catholicism prevents fertility from dropping fast when education of parents rise. → accounting for interaction terms Eif × Eim × Rfi is important. 13 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Other religions Model B - Philippines - Fertility of Women born 1945 (No relig. [ Catholic ] [ Buddhist ] [ Muslim ]) Eim f Ei (i) (ii) (iii) (iv) (i) 5.58a [– 0.43c ] 5.71a [+ 0.36c ] [– 0.30] [– 0.26b ] a [– 0.86 ] [– 0.44b ] (ii) 4.92a [+ 0.90a ] [+ 0.49b ] [+ 0.50b ] (v) 5.22a [+ 0.69a ] [– 0.15c ] [– 0.56a ] (iii) 4.01a [ + 1.29a ] [ + 0.37b ] [ + 1.81a ] 3.65a [ + 1.18a ] [ + 0.44b ] [+ 2.41a ] (iv) 3.22a [ + 1.13a ] [ + 0.73a ] [ + 1.88a ] 2.88a [ + 1.16a ] [ + 1.16a ] [+ 1.94a ] Here too, the effect is more important for educated categories 14 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Robustness – Check that father’s religion is correlated with mother’s religion – Endogeneity of religion ? Use grand-mother religion instead – Impact of religion country dependent? mean effect - jacknife 2.0e+04 0 Density Distribution of Fertility: Frequency 4.0e+04 6.0e+04 8.0e+04 – Poisson or oprobit instead of OLS 0 10 20 30 Children ever born 15 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Model of the Household max st ,nt ,et ,atf ,atm s.t. ct η ln(ct ) + σ ln(dt+1 ) + γ ln nt ht+1 = ωhtf (1 − atf nt ) + htm (1 − atm nt ) − st − et nt hT dt+1 = Rt+1 st , ht+1 = µt (θ + et )ξ , q 1 atf atm . nt = φ γ: η: ξ: θ: σ: φ: taste for children vs own consumption weight of quality return on education spending exogenous level of public education psychological discount factor time cost parameter (1) ω: female wage 1: male wage 16 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Time allocation The maximization problem can be decomposed into two steps. First, for some given number of children, parents allocate their time efficiently: min (ωhtf atf + htm atm ) nt atf ,atm subject to (1) This cost minimization problem leads to the following optimal rules (for n < 1/φ): s s m htm h ωhft 1 t 2 2 f m φnt , > φ n , a = = φn , a if 2 2 > t t t t hm φ nt ωhtf ωhft t hm 1 if t f > 2 2 , atf = 1, atm = φ2 nt2 , φ nt ωht hm if φ2 nt2 > t f , atf = φ2 nt2 , atm = 1. ωht 17 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Solution to household problem st = If σ (ωhtf + htm ) 1+σ+γ ωhtf htm et nt > = = θhT 2φηξ 2 then 2φηξ p ωhtf htm − θhT , (1 − ηξ)hT p (1 − ηξ)γ(ωhtf + htm ) 2φ ωhtf htm + θhT . 1+σ+γ 4φ2 ωhtf htm − θ2 hT 2 else et = 0, nt = γ(ωhtf + htm ) p . 2(1 + σ + γ)φ ωhtf htm 18 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Identification Rise in γ Drop in η n n 5.5 5.5 5.0 5.0 4.5 4.5 4.0 4.0 3.5 1.0 1.2 1.4 1.6 1.8 hf 3.5 1.0 1.2 1.4 1.6 1.8 hf 19 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Possible effects of religion ∃ 2 effects we can identify by looking at fertility Pro-child (γ ↑): leads people to put more weight on children (number & quality) . vs. own consumption. be fruitful and multiply (Gen 1,28): ּפרּו ּורְבּו Pro-birth (η ↓): leads people to put more weight on number children vs. other goods. Abraham, father of a multitude 20 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Spending on Quantity and Quality A pro-child religion (high γ) leads to more spending of the two types, while a pro-birth religion (low η) redirects spending from quality towards quantity: γηξ et nt hT = for θ = 0 f m 1+γ+σ ωht + ht p γ(1 − ηξ) 2φ ωhtf htm n = for θ = 0 1+γ+σ ωhtf + htm 21 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Structural estimation - Parameters fixed ex ante 1 period = 30 years hT : f, secondary completed Wages by education level: estimation for the Philippines (Luo & Terada) hf hm (i) 1 1 ξ ω φ σ (ii) 1.035 1.065 (iii) 1.07 1.13 (iv) 1.46 1.37 0.33 0.75 0.075 0.99120 = 0.3 (v) 2.16 1.86 22 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Min. distance estimation XX min θ,γz ,ηz z ˆi,j,z − n? [θ, γz , ηz , hf (i), hm (j)])2 . pi,j,z (N i,j No relig. θ Model B Catholic Buddhist 0.053 Muslim (0.0021) γz ηz 0.684 0.763 0.659 0.702 (0.0107) (0.0771) (0.0554) (0.0094) 2.105 1.918 1.902 1.707 (0.0513) (0.0598) (0.0528) (0.0711) 23 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Pro-birth and Pro-child Religions 0.25 Pro-child (D+g) 0.2 g (1-h x) weight on quantity Pro-birth (D- h) Muslims 0.15 Catholics Buddhists Non religious 0.1 0.1 0.15 0.2 g h x: weight on quality 0.25 24 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Macro Model Effect of these differences in preferences on long-run growth ? BGP: ht = htf = htm = hT Externality: µt hˆt = µ hˆtκ (1 + ρ)(1−κ)t , = htτ hT 1−τ . Allows for endogenous growth (κ = 1) and exogenous growth (κ < 1) Production: Yt = AKtε L1−ε t 25 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Equilibrium Lt = √ √ ωht (1 − φn/ ω) + ht (1 − φn ω) − et nt hT Pt , Pt+1 = Pt nt /2, Kt+1 = Pt st . 26 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Corner regime When human capital ht is low, economy is in corner regime with et = 0. Proposition. [Religion in the corner regime] In the corner regime, a pro-child religion (∆+ γ) has a negative effect on income per capita. A pro-birth religion (∆− η) has no effect beyond making the corner regime more likely. 27 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Interior regime - growth Proposition. [Growth in the interior regime] If √ 2ηφξ ω > θ the long-run growth factor of gdp per capita is: √ 2ηφξ ω − θ g =µ θ+ 1 − ηξ if κ = 1, and g = 1 + ρ otherwise. Corollary. [Religion in the interior regime] A pro-child religion (∆+ γ) has no effect on long-run growth. A pro-birth religion (∆− η) permanently affects the long-run growth rate in the endogenous growth case (κ = 1). 28 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Interior regime - income Proposition.[Religion and income] When growth is exogenous(κ < 1): A pro-child religion (∆+ γ) lowers the long run income per person ˆ A pro-birth religion yˆt through physical capital accumulation k. − (∆ η) lowers the long run income per person yˆt through human ˆ capital accumulation h. 29 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Macro parameters Parameters τ κ ρ µ ε A 1/10 0 or 1 2% g = 1.0230 1/3 (1 − ε)AKtε L−ε t =1 Initial conditions: ht /hT = 0.3 Kt such that capital/labor ratio = steady state 30 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Hypothetical countries - endogenous growth t=1 t=6 nt θ + et (% gdp) st /((1 + ω)ht wt ) Lt /(Pt ht ) yt annual growth nt θ + et (% gdp) st /((1 + ω)ht wt ) Lt /(Pt ht ) yt annual growth No religious affil. 5.36 4.14% 15.10% 1.15 1.28 3.07% 3.73 10.5% 15.10% 1.18 42.50 2.25% Catholics 5.75 4.39% 14.52% 1.10 1.21 2.96% 4.36 9.53% 14.52% 1.12 24.88 1.84% Buddhists 5.23 4.06% 15.29% 1.16 1.31 3.11% 4.00 8.05% 15.29% 1.17 26.38 1.81% Muslims 5.45 4.20% 15.04% 1.14 1.26 3.05% 4.67 5.50% 15.04% 1.14 15.48 1.44% NB: only difference across hypothetical countries is η and γ 31 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Hypothetical countries - exogenous growth t = 1 (et = 0) nt yt annual growth No relig. 4.57 0.95 2.04% Catholics 5.09 0.89 1.92% Buddhists 5.23 0.96 2.06% Muslims 5.45 0.92 1.98% t = 6 (et > 0) nt yt annual growth 3.12 29.75 2.14% 4.11 23.98 2.09% 3.93 26.17 2.08% 4.54 21.79 2.04% 32 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Countries’ growth countries’ growth rates data 1950-80 1980-2010 endogenous t=1 t=2 t=3 growth gaps ThaInd-Phi -Phi Tha-Ind Ind Mal Phi Vie Tha Vie-Ind 2.85 3.09 2.88 3.44 2.69 0.81 0.47 4.94 3.87 4.43 -2.38 1.85 1.18 3.62 0.15 2.28 1.02 1.34 growth 3.04 3.06 2.17 2.21 1.80 1.86 2.97 2.30 2.04 3.07 2.52 2.32 3.11 2.34 2.05 0.02 0.35 0.53 0.13 0.04 0.01 0.07 -0.13 -0.25 0.07 0.17 0.26 33 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion 1950-80 countries’ growth rates growth gaps ThaInd-Phi -Phi Tha-Ind Ind Mal Phi Vie Tha Vie-Ind 2.85 2.88 2.69 0.47 3.87 -2.38 1.18 0.15 1.02 endogenous growth t=1 3.04 3.06 2.97 3.07 3.11 0.02 0.13 0.07 0.07 data 1950-80 Matches relative performance countries (but Vietnam). 10% to 50% of magnitude is explained by religion. 34 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion 1990-2010 countries’ growth rates growth gaps ThaInd-Phi -Phi Tha-Ind Ind Mal Phi Vie Tha Vie-Ind 3.09 3.44 0.81 4.94 4.43 1.85 3.62 2.28 1.34 2.21 1.86 2.30 2.04 2.52 2.32 2.34 2.05 0.35 0.53 0.04 0.01 -0.13 -0.25 0.17 0.26 data 1980-2010 endogenous growth t=2 t=3 2.17 1.80 Religion explains – lead of Vietnam ( 1/5 of the difference) – domination of Thailand over Muslims countries (1/6 of the gap) Failure: cannot explain the bad performance of the Philippines 35 / 36 Introduction Auxiliary Structural Counterfactuals Conclusion Conclusion Pro-natalist religions can or cannot damage growth, depending on – the stage of growth – whether they are pro-child (∆+ e, n) or pro-birth (∆− e, ∆+ n) One can identify these effects by looking at how religion and education interact in explaining fertility From South-East Asian censuses, Islam is the most pro-birth while Catholicism is the most pro-child Account for 10% to 50% of cross-country growth over 1950-80, and 15% of the gap between buddhists and muslims countries over 1980-2010. With secularization, one may think that these effects will be weaker in the future 36 / 36
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