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A weak economy reduces population growth

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Sergio Perez/Reuters/File

(Read caption) In this file photo, a Spanish flag flutters near the dome of the Bank of Spain in central Madrid February 15, 2010. After a population growth increase during the country's 2000 to 2007 housing boom, population growth collapsed along with the economy in 2010.

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The link between population growth and economic growth goes both ways. Higher/lower population growth should (assuming it increases the labor force) increase/decrease economic growth all else being equal, but it is also the case that higher/lower economic growth increases/decreases population growth.
We can see the latter in the case of Spain, whose population growth increased during its housing fueled boom, from 1.07% in 2000 to 1.82% in 2007, only to collapse to 0.36% in 2010, with population population growth expected to be negative this year.
Similarly, Ireland's population growth increased from less than 1% in 1999 to about 2.5% in 2006, only to drop to 0.3% in 2010.

Similarly, Nevada had really rapid population growth during the bubble, but now the population has stopped growing.
There are two reasons for this. The most important is that a booming economy will make more people want to move to a state or country, while an economic downturn will prompt people to leave. The other reason is that a boom will make people more likely to feel that they can afford to have children, while an economic downturn and the job losses or fear of losing your job in the future will make more people unable to afford to have children, or fear that they might be unable to afford it in the future.
We can see this in this interesting graph in the Wall Street Journal. The states with the sharpest downturns have seen their fertility rates drop sharply, with a drop between 2007 and 2009 of 5.3% in California and 7.7% in Nevada. By contrast, booming North Dakota has seen its fertility rate increase by 1.2%.
Interestingly, the fertility rate hasn't however dropped in Ireland, and has remained at a very high level. The sharp drop in its population growth is thus entirely due to a swing from large scale net immigration to significant net emigration.


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