Brett McCully (Collegio Carlo Alberto)

 “Structural Transformation and the Demographic Transition: Evidence from Bangladesh”

Abstract. We study the effect of the demographic transition on structural transformation. To do so, we leverage the quasi-random placement of a program which reduced fertility and early-life mortality in rural Bangladesh. The program resulted in a smaller population in treatment villages, with higher human capital for children given mortality-reducing vaccines. We use rich data that allows us to follow treated and untreated households across 35 years. Increased labor market competition experienced by control group households—where the population was higher—drove households to send workers to urban areas in search of employment in manufacturing or office work. By contrast, treated households were more likely to remain in agriculture and experienced 32 percent higher profits per acre farmed. The higher agricultural productivity was driven in part by a 30 percent higher rate of adoption of high-yield variety seeds.