Demography and Per Head Income of the Russian Regions

Abstract

Theories of economic growth and empirical studies suggest a negative effect of population growth on economic growth. This study examines the link between the two variables in 82 subjects of the Russian Federation over 2002–2019. Descriptive statistics show that Russia reaped a demographic dividend and is now paying a demographic tax. General theoretical framework for empirical analysis was drawn from the neoclassical growth theory, and panel data econometrics suggested the appropriate empirical methodology. The pooled mean group estimator was applied to an autoregressive distributed lags model based on the Solow model. We found a statistically significate negative long-term dependence (in growth terms) of per capita income on population, total fertility rate and dependence ratio. Also, three auxiliary hypotheses were tested. First: population growth variables that emphasize the relative growth of the young/dependent population (ages 0–14 years) should show a more adverse effect on economic growth than measures of growth in the total or working-age populations. Second: the partial association between population growth and economic growth will be more positive when the regression controls for investment (the resource-dilution effect). Third: the effect of population growth on economic growth is more adverse in developing countries (regions) because of greater resource-dilution and resource diversion effects, as well as poorer policy environments. These hypotheses are not rejected