Yanyan Liu is a research fellow in IFPRI’s Markets, Trade and Institutions Division.
The world’s population is both rapidly expanding and becoming increasingly urbanized. But while population growth poses significant challenges to food security and sustainable resource use, particularly in developing countries, a study I conducted with Futoshi Yamauchi of the World Bank suggests that for more educated households, the news may not be all bad.
Population Density, Migration, and the Returns to Human Capital and Land looks at Indonesian survey and census data from 2000-2007. The study reaches several interesting conclusions regarding how households respond to changes in population density, but I will focus here on our findings regarding education. Our analysis shows that the household-level effects of population growth and high population density depend in large part on how educated those households are. Over time, younger and more educated people tend to migrate out of rural areas and into urban areas where there is more opportunity for economic growth and further education. As this happens, pressure on rural households’ resources, such as land, declines, meaning that overall population growth may not be as harmful to rural populations’ welfare as is sometimes thought, particularly among households with higher levels of education.
Education also appears important when it comes to the effects of changes in population density. As population density increases, households with an average level of schooling above junior high school tend to have higher levels of welfare, as measured through per capita consumption expenditures; this effect is reversed for households with lower levels of education. This finding suggests that more educated households are better able to take advantage of the positive effects of population growth, such as lower production prices resulting from various suppliers congregating in the same area (what is known as “agglomeration economies”). Such opportunities may not be available to the less educated. For households with members who migrate to more densely populated urban areas, higher education can also increase wage income (meaning income earned through non-farm activities). This latter effect could be explained by the fact that more educated migrants are able to get better paying jobs in the city.
The findings from Indonesia suggest some important lessons for other developing countries, the chief one being the importance of investing in education early on in a country’s development, before large changes in migration patterns and population density occur. By increasing educational levels, as Indonesia did in the 1970s and 1980s when it expanded construction of public schools, a country can ensure that its people are better able to take advantage of and contribute to expanding labor opportunities outside of traditional rural areas. In turn, migration to urban areas can help absorb rapidly growing rural populations and reduce the pressure on scarce rural resources.
With contributions from Sara Gustafson
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