Demographic trends and Engel's law across the development spectrum

This study uses household-level consumption data from 20 countries.

Abstract

Economic progress brings with it 2 key patterns. Firstly, this paper observes the progressive change in the demographic structure of the population. Secondly, as nations advance economically, the portion of food in total expenditures tends to decrease. The finding suggests that an ageing population will result in a higher overall food share of total expenditures. The author test this hypothesis by constructing a quantitative, demand side model and document that the demographic evolution slows down the shift away from food consumption in almost every country in the sample. The correlation between income and the demographic transition implies that not accounting for demography leads to an underestimation of the income effect by up to 20%.

This paper is part of the Structural Transformation and Economic Growth (STEG) programme.

Citation

Difino DM. ‘Demographic trends and Engel’s law across the development spectrum’ STEG Working Paper Series WP 096 2024

Demographic trends and Engel’s law across the development spectrum

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Published 25 April 2024