CONTRACEPTION AND DEVELOPMENT: A UNIFIED GROWTH THEORY

• Author: Holger Strulik
• DOI: http://doi.org/10.1111/iere.12227
• Date: 01 May 2017
• Published date: 01 May 2017

INTERNATIONAL ECONOMIC REVIEW

Vol. 58, No. 2, May 2017

CONTRACEPTION AND DEVELOPMENT: A UNIFIED GROWTH THEORY∗

BYHOLGER STRULIK1

University of Goettingen, Germany

This study investigates the interaction of the use of modern contraceptives, fertility, education, and long-run

growth. It develops an economic model that takes into account that sexual intercourse is utility enhancing and

that birth control by modern contraceptives is more efficient but more costly than traditional methods. The study

shows how a traditional economy, in which modern contraceptives are not used, gradually converges toward a

high growth regime, in which modern contraceptives are used. Lower prices or higher efficacy of contraceptives

are conducive to an earlier onset of the fertility transition and a quicker takeoff to modern growth.

1. INTRODUCTION

There exists a vast literature on child demand and demographic–economic development

built upon the idea that households spend part of their income to have children. The idea that

households spend income in order to not have children, however, has received relatively little

attention in the literature. This article acknowledges that sexual intercourse (hereafter referred

to as sex) is a utility enhancing activity and develops a theory of demand for children as well as

for contraceptives. The use of modern contraceptives allows households to experience utility

from sex without a proportional increase in child births. Consequently, family size becomes a

function of the price and efficacy of contraceptives. A smaller family size requires less time

dedicated to child rearing by the parents, and part of the released time is spent on children’s

education. Through this channel, the cost and efficacy of contraceptives have a significant impact

on the onset of the fertility transition and on the speed of convergence toward a steady state of

high economic growth.

This study contributes to the literature on unified growth theory by investigating the takeoff

from quasi-stagnation to modern growth and by emphasizing the importance of the fertility

transition and the child quality–quantity trade-off for successful long-run development.2It ex-

tends the literature by exploring the role of sexual desire (besides the desire for fertility) and the

impact of price and efficacy of contraceptives for the onset and speed of the fertility transition.

The existence of contraceptives creates multiple equilibria of which the equilibrium of high

growth is potentially latent. When households start using modern contraceptives, a threshold is

crossed such that with rising income households gradually substitute child quantity with child

quality (education). Crossing this threshold may be caused exogenously (by a sufficiently strong

decline of the price for contraceptives) or endogenously (by gradually rising household income

and education). The steady-state growth rates at the low-growth equilibrium and at the high-

growth equilibrium are independent from the price and efficacy of contraception. Contraception

∗Manuscript received September 2014; revised August 2015.

1I would like to thank Arnab Basu, Nancy Chau, Carl-Johan Dalgaard, Oded Galor, Nippe Lagerlof, Sophia Kan,

Stephan Klasen, Marc Klemp, John Knowles, Lars Loenstrup, Alexia Prskwetz, Klaus Prettner, and two anony-

mous referees for comments. Please address correspondence to: Holger Strulik, Department of Economics, Univer-

sity of Goettingen, Platz der Goettinger Sieben 3, 37073 Goettingen, Germany. Phone: +49(0)551/39-10614. E-mail:

holger.strulik@wiwi.uni-goettingen.de.

2For unified growth, see Galor and Weil (2000), K¨

ogel and Prskawetz (2001), Galor and Moav (2002, 2006), Doepke

(2004), Strulik et al. (2013), and many others. See Galor (2011) for a survey.

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(2017) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social

and Economic Research Association

562 STRULIK

only temporarily impacts on growth by initiating and accelerating the fertility transition. The

fertility transition is accompanied by a rise of sexual intercourse (in marriage).

The happiness literature has produced compelling evidence that sex is utility enhancing

(Blanchflower and Oswald, 2004). This is true for both men and women. According to a study by

Kahneman et al. (2004), sex is the activity that provides the single largest amount of happiness

for a sample of women in the United States. At the same time, there is surprisingly little

support for the conventional Beckerian view that utility increases with family size (Margolis

and MyRskyl¨

a, 2011; Deaton and Stone, 2014). These observations may appear puzzling from

a conventional economic viewpoint, but they are readily explained by evolutionary psychology.

By Darwinian selection, the human brain evolved to experience joy from sex long before it was

able to understand reproductive biology. During most of evolution humans had no clear notion

of how sexual intercourse was related to fertility, which explains the desire for sex without

the desire for (more) children and the use of contraceptives (Wright, 1994). According to

the biologists’ take on the demographic transition, summarized in Potts (1997), people always

wanted to control family size but had no methods to achieve this goal efficiently for most

of human history. The fertility transition begins after the discovery of effective methods of

contraception. A negative relationship between income and fertility and between education

and fertility then arises because the wealthy and well-educated are more successful than the

poor in obtaining costly contraception.

The two perhaps greatest innovations of contraceptive technology, the rubber condom (1855)

and the contraceptive pill (1960), happened suspiciously close to the onset of the first demo-

graphic transition and the second demographic transition in many Western countries. Some

economic historians are nevertheless reluctant to make a causal connection with respect to the

first fertility transition because the price of condoms was still relatively high at the end of the

19th century (Guinnane, 2011). As shown below, this view is hard to support in a heterogenous

society. Allowing for heterogeneity, there will always be some couples rich enough to find con-

traceptives attractive even at a high price. These pioneers of the fertility transition will have

fewer children and initiate the demographic transition and the takeoff to growth. With growing

income levels, contraceptive use will be adopted by poorer individuals as well, which in turn

further quickens the fertility transition and convergence to modern growth.3

The argument that prices could be too high for modern contraceptives to play a role for

the onset of the fertility transition is actually supportive of the mechanism suggested in this

article. It shows that prices were decisive for the decision to use modern contraceptives during

the historical fertility transition of the West. With respect to contemporaneous developing

countries it is a far less contested issue that contraceptive use is a leading proximate cause of

the fertility decline (for example, Bongaarts and Potter, 1983; Westoff and Bankole, 2001; Lule

et al., 2007; Darroch and Sing, 2013). Figure 1 shows the strong negative association between

the total fertility rate and the prevalence rate of modern contraceptives in developing countries.

The data are taken from the available Demographic and Health Surveys (DHS: ICF, 2014).

Open circles represent data from surveys taken from 1985 to 1999, and solid circles represent

surveys from 2000 to 2012. The association seems to be almost time-invariant since the 1980s.

The fertility transition moves in sync with intensified use of modern contraceptives.

Although the positive association of the fertility transition with the rise in education and

its impact on the takeoff to modern growth is well established in the literature (for example,

Galor, 2011; Dalgaard and Strulik, 2013), the role of contraceptives for these developments is

perhaps less intensively researched. With respect to oral contraceptives, Bailey (2010, 2013)

uses legal differences across U.S. states (the Comstock laws) and health policy differences

across U.S. counties and show that increased contraception in the 1960s and ’70s had not only

a causal impact on fertility but also a positive impact on education and income of subsequent

3See Livi-Bacci (1986) and Haines (1989) for evidence that the fertility transition started among the rich. By taking

the price of contraception into account, this article provides an alternative and possibly complementing mechanism to

the more common view that contraception diffused through social learning from the rich to the poor (Seccombe, 1990).