THE TRANSITION'S POPULATION CRISIS:
AN ECONOMETRIC INVESTIGATION OF NUPTIALITY,
FERTILITY AND MORTALITY IN SEVERELY
DISTRESSED ECONOMIES
Giovanni Andrea Cornia* and Renato Paniccià**
INTRODUCTION
In most of Central and Eastern Europe and the former Soviet Union (hereafter referred to in brief as
"Eastern Europe"), the economic and political reforms of the last six years have been accompanied
by an unprecedented fall in output, a rapid impoverishment of large sections of society, increasing
uncertainty about the future and an exceptional population crisis. Between 1989 and 1994, marriage
rates fell by between one-quarter and one-half; birth rates shrank by up to 40 percent and death
rates among male adults due to cardiovascular and violent causes often more than doubled
(UNICEF 1994, 1995). By 1994 the life expectancy at birth of Russian males had fallen to the
same level of that of Pakistani males, while the natural increase of the population had become
negative in Bulgaria, the Czech Republic, Hungary, Romania, the three Baltic countries, Russia,
Ukraine and Belarus.
Mainstream thinking attributes this population crisis to factors broadly unrelated to the
economic and social difficulties experienced during the transition. According to this view, a large part
of the recent increase in mortality is the result of greater "glasnost in statistics'. This would have
revealed the exact extent of the health crisis concealed in the past by doctors and administrators
fearful of being blamed for the poor performance of their hospitals (Eberstadt 1990, 1994). In turn,
most of the "real increase" in mortality is said to be due to endogenous long-term trends in
environmental degradation and poor lifestyles, and not to current economic changes (Feshback and
Friendly 1992). Meanwhile, the worsening of some traditional risk-factors (for instance, the increase
in alcohol consumption brought about by the liberalization of alcohol sales) would have pushed
upwards the mortality due to cirrhosis and violent causes.
As regards the fall in marriage and birth rates and the increase in the proportion in births out
of wedlock observed over 1989-94, the dominant viewpoint attributes them to the spread of
"individualistic Western values". These "values" involve the rejection of conventional social norms,
greater personal and sexual freedom and higher valuation of the opportunity cost of the consumption
forgone due to the birth of a child. Their spread would have eroded the preference attached in pretransition societies to early marriage, the restraint of sexual activities before marriage and procreation
at a young age (Council of Europe 1993). The erosion of the pro-natalist measures typical of the
socialist era, or, as in the case of Romania, relaxation of the norms prohibiting abortion are also
factors frequently cited.
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*UNU/WIDER and ** UNICEF/ICDC. An earlier version of this paper was published as the
UNICEF ICDC's Innocenti Occasional Paper n.49. We wish to thank A.K. Sen, Michael Lipton,
Massimo Livi-Bacci, Michael Walton and Stan D'Souza for commenting on an earlier draft of this
paper. We are also indebted to Gáspár Fajth for constructing the "public child support variable",
Enrico Sborgi for assistance in data compilation and colleagues in the central statistical offices of
several Eastern European countries - above all Jaroslav Novak, Juri Uljas, Zita Sniukstiene, Judit
Lakatos, Andrzej Ochocki, Marious Pop and Olga Remenets - for providing data and comments.
All remaining mistakes are obviously ours.
These explanations are, however, unconvincing and at best partial. In turn,
received demographic and household behavior theory poorly explain the recent
mortality, nuptiality and fertility changes observed in the transitional economies
experiencing sudden and large shocks and mounting uncertainty. Demographic
changes of the magnitude discussed in this paper have been observed only
during famines or wars, though under these circumstances large mortality
increases have been most commonly caused by infectious diseases and
undernutrition, and the drop in fertility by biological rather than social factors.
Thus, while "famine studies" (Livi-Bacci 1993, Lumey et al. 1993, Lumey and
Van Poppel 1994) do offer interesting insights and parallels to the analysis of
transition mortality and fertility, they do not refer to similar contextual situations
or mortality patterns. Similarly, while useful in underscoring the key relationship
between social structure and health status, analyses such as "Society, Stress and
Disease" (Levi et al. 1981) do not deal with the impact of economic shocks and
rising uncertainty on mortality and fertility. Finally, the causation process
underlying the recent demographic crisis in Eastern Europe is also very different
from that sketched out by standard "demographic transition theories". In Eastern
Europe, these theories would provide predictions opposed to the changes
observed over 1989-94.
Thus, neither fashionable explanations nor major demographic and
household behavior models seem to be able to explain the transition population
crisis of Eastern Europe. Among the past analyses, the most relevant are those
linking sharp and sudden changes in household incomes, unemployment and
prices to demographic outcomes. These analyses are few and far between, with
the possible exception of those on the impact of the Great Depression (Brenner
1973, Eyer and Sterling 1977). Even these studies, however, do not generally
refer to large, country-wide variations in aggregate demographic variables, but
rather to the impact of given 'stressors' on demographic outcomes at the
individual level. Studies relying on microeconomic or regional data on the US,
Canada, Britain, Ireland, Finland and the Scandinavian countries and making use
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of the concepts of "psychosocial stress" have successfully tied changes in stress
variables (family instability and breakdown, job insecurity, unemployment,
impoverishment, high inflation, migration and depression) to mortality and
fertility outcomes (Brenner 1987, Beale and Nethercott 1985, 1989, Smith 1992,
Kalimo and Vuori 1993, Whelan et al. 1994, Bjorklund and Erikson 1995).
This paper aims at debunking the traditional approach and at testing the
hypothesis that the current transition population crisis is the result of growing
economic instability, social stress, unfavourable expectations about the future
and inadequate policy action. If this hypothesis is verified, the most suitable
solution to the current mortality and fertility crisis of Eastern Europe would
require not only stronger measures in the field of health and family policy, but
also more aggressive initiatives to support employment, minimum wages and
social transfers, enhance tax collection and control inflation.
The above hypotheses are tested making use of aggregate and age-specific
time series data for 1970-89 and 1989-94 for 13 Eastern European countries,
representing 75 percent of the population of the former Soviet Bloc. This
includes four areas (Central Europe, Southeastern Europe, the Baltic nations and
the Slavic countries of the former Soviet Union including Moldova) showing
considerable intercountry and interregional variation, thus allowing the risk of
spurious or weak inference to be minimized.
II. A DRASTIC DEMOGRAPHIC ADJUSTMENT
IN RELATION TO THE PRE-TRANSITION PERIOD
I.1. PRE-TRANSITION TRENDS
AND THE TRANSITION DEMOGRAPHIC CRISIS
(i) Crude Marriage Rate (CMR). In the 1950s and 60s marriage rates soared to record levels.
Some 90 percent of the people in the relevant population group contracted marriage and had
children fairly early, while out-of-wedlock births accounted for well below 10 percent. With the
exception of Romania, between 1970 and 1989 the CMR fell markedly. A similar though less
pronounced trend was observed in the total first-marriage rate, a measure of nuptiality which is
independent of the age structure of the population (Table 1). Compared to the Western European
countries, the fall in CMR was considerably less pronounced and, with the exception of Estonia and
Latvia, unaccompanied by a parallel increase in cohabitation rates (Council of Europe 1993). In
addition, the mean age at first marriage increased at only one-sixth the rate observed in Western
Europe.
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Table 1. Cumulative Percentage Changes in Total First Marriage Rate for Women (TFMRW) over
1970-89 and in Crude Marriage Rate (CMR) and in Mean Age at First Marriage of Women over
1970-89 and 1989-93/4.
(a) CSFR, (b)
Source: Council of Europe(1993), TransMONEE
Therefore, despite some growth in the opportunities for material consumption and the rising
levels of educational attainment and employment among women, over the 1970-89 period the
traditional marriage pattern prevailing in most of Eastern Europe was not radically altered. This
stability was in part due to policy factors. Housing policy (giving precedence to young couples with
children), as well as lack of financial support for cohabitation and other extramarital arrangements,
influenced the age at birth of the first child and the slow rise in cohabitation.
The situation has changed drastically, though with large variations from country to country,
between 1989-94 (Table 1). The CMR dropped by between 13 percent in Romania and 51
percent in Estonia. On average, the decline over 1989-94 was at least twice as large as that
recorded over the previous two decades. Interestingly, in six of the 13 countries analysed, the CMR
rose significantly (especially for the 20-4 age cohort) in the first reform year, often after a number of
yearly drops. This phenomenon, which we called here the "initial euphoria effect", likely reflects the
exhilaration induced by political liberalization and the positive expectations about future
improvements in living standards during the first year of reform.
In all countries, the decline in the CMR observed over 1989-1994 was significantly greater than that
expected on the basis of the 1970-89 trend. Declines in the size of the cohorts reaching the age of most frequent
marriage explain only a small part of this phenomenon. Nor can this event be attributed to a postponement of first
marriages, as the average age at marriage did not increase meaningfully (Table 1). The data thus indicate not so
much a change in attitudes vis-à-vis marriage, but rather an absolute contraction in the frequency of marriage
among all age groups. This conclusion is clearly borne out by the changes in age-specific marriage rates that
show that the drop in nuptiality affected practically all age groups (Table 2). Except in Estonia, the sharpest
contraction in marriages did not generally occur among the 20-4 and 25-9 age groups, that is, the cohorts for
which a "marriage postponement strategy" could be surmised.
Table 2. Percentage Changes in Age-Specific Marriage Rates, 1989-93
Notes: * 1989-94, ** 1989-1993.
Source: TransMONEE database.
(ii)Crude Birth Rate (CBR) and Total Fertility Rate (TFR). By the mid-to-late 1960s, the TFR in
most of Eastern Europe had declined to 2.2-2.4, that is, levels similar to those of the countries of
Western Europe. While over the subsequent two decades the TFR and CBR in Western Europe
continued to drop, in Eastern Europe the slow decrease in marriage rates, the limited availability of
or prohibition on contraception and generous pro-natalist family policies contained substantially the
decline in fertility. In the mid-to-late 1980s, the TFR even recovered an upward trend in most
members of the former Soviet Union, Romania and Poland. Thus, only the GDR and Romania
experienced over the 1970-89 period a clear fall in the TFR despite the introduction of generous
social benefits, especially for unmarried mothers.
Table 3. Percentage Cumulative Decline in Crude Birth Rate (CBR) and in Total Fertility Rate
(TFR) over 1970-1989 and 1989-94.
Notes: (a) CSFR, (b) 1989-1992, (c) 1989-1993,
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Source: Council of Europe(1993),
The 1989-94 period witnessed drops in the CBR and TFR similar to those observed in the
case of the CMR (Table 3) and, in general, much larger than those projected on the basis of the
pre-transition trends. The largest drops were observed in Romania, Estonia and Russia, where the
pro-natalist or anti-abortion policies of the previous regimes were abandoned in early 1990. The
CBR decreased by 15 to 28 percent in the other countries of the former Soviet Union, Poland and
Bulgaria. In the Czech Republic, Slovakia and Hungary the drop was delayed (until 1992) and less
pronounced.
In practically all countries, this seemingly universal downturn in crude birth rates has been
accompanied by an increase in the percentage of first births in the total and has been the least
pronounced among teenagers (Table 4). In Lithuania, fertility among the 15-19 age group actually
increased. The trend toward greater fertility among teenagers relatively to other age groups is the
harbinger of considerable problems for both the child and the young, often single mother who is
generally neither economically independent, nor psychologically mature enough to raise a child.
Table 4. Percentage Changes in Age Specific Birth Rates, 1989-93/4
Notes: * 1989-94, ** 1990-93.
Source: TransMONEE database.
Changes in the share of women of reproductive age in the total explain only a small part of
the overall decline in births and then only in some countries. While the share of women aged 15-39
remained basically constant in all countries, in Poland, Ukraine and Russia (but not in the others) the
share of women 20-9 years old diminished by 5 and 10 percent. Even in this case, however, this
decline explains only a modest part of the contraction in births.
The drop in birth rates is explained instead by the lower nuptiality and higher migration of
and greater mortality among young and middle-aged males that, ceteris paribus, have worsened the
sex ratio in the fertile age group and thus reduced the share of married women in the fertile age
group. The cumulative impact of these factors on natality was likely limited during the first posttransition years, but has gradually intensified over time in those countries affected by either one, or
both of these two phenomena. However, the main cause of the decline in the CBR was the dip in
marital fertility (which cannot be measured here because of the lack of data on birth rates by marital
status).
The drop in overall fertility (for married and unmarried women alike) affected most age
groups (Table 4). Only in Hungary and Poland was the contraction more pronounced among
younger women, thus leaving open the possibility of that fertility will "catch up" in the future. In
Russia, Lithuania and Romania, in contrast, while the natality decline involved all age groups, it
appears to have been most pronounced among the women in the 30-49 age group (for whom a
"catching up" in fertility is impossible). In these countries the drop in fertility therefore appears more
permanent.
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Similar changes have been observed for the TFR, which fell at rates which were
considerably faster than those of the previous 20 years (Table 3). However, in the Czech Republic,
Hungary, Poland and Slovakia the drop in the TFR was delayed by one or two years, and in a few
cases it even rose in 1990 or 1991, confirming the "initial euphoria effect" mentioned earlier. In the
remaining countries the TFR declined by between 15-30 percent, while in Estonia it plummeted by a
remarkable 37 percent. In most countries the TFR drop was several times more rapid than it had
been during the previous 20 years.
As in the case of marriage, it has been suggested that the fall in the TFR may not be related
to the transition, but rather to changes in lifestyles and attitudes among Eastern European women.
According to this view, these women have adjusted to the values and behaviours of their Western
counterparts who frequently emphasize the importance of work and career, greater individualism
and later pregnancies (Avraamova 1994). However, this is not supported by facts, as shown by the
more rapid than average decline in fertility rates among older women (Table 4), by the frequent
increases in the share of first births in the total and by the results of recent surveys on factors
influencing the decisions of women on childbearing. For instance, in a 1992 survey in Russia, threefourths of the women interviewed cited insufficient income as a major barrier to having another child,
while over half said inadequate housing was the main cause. Only 1 percent cited interference with
their educational or career aspirations as the main motivation. In addition, respectively one-fourth
and one-half of these women said they might have another child if they were to receive a child
allowance or if housing conditions were improved (Haub 1994).
(iii) A sharp increase in crude death rates and in mortality rates among middle-aged males (Table 5).
Between the early 1950s and 1965 life expectancy at birth (LEB) improved extremely rapidly, by
about eight years for men and nine years for women, mainly due to the swift decline in the number of
deaths due to infectious, parasitic and respiratory diseases, injury, poisoning and "other" causes (UN
1982). However, mortality deteriorated sharply between the mid-1960s and the mid-80s. For the
region as a whole, LEB fell by one year for men, with much larger drops in Hungary and the USSR
of 2.5 and 3 years, respectively (UN 1982). While LEB continued to climb for women, the pace of
improvement was sluggish. The deterioration was, however, particularly marked for middle-aged
adults and most of all for middle-aged men.
Table 5. Cumulative Percentage Changes in Crude Death Rate (CDR) ,and Age
Specific Death Rate (ASDR) (per 1,000 people in the corresponding age bracket) for
Male Adults in selected age brackets, 1970-89 and 1989-93/94.
Source: Council of Europe(1993), TransMONEE
During the immediate pre-transition years, health conditions stabilized, and, with the
exception of Hungary, LEB started to rise again at only a slightly slower pace than that registered in
other regions. In Russia, for instance, life expectancy for males, rose from 61.5 years in 1981 to
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65.1 years in 1986 because of the improvement in some of the risk-factors, for example, alcohol
consumption (Tarschys 1993).
Between 1989 and 1994 the CDR soared in all but two (the Czech Republic and Slovakia)
of the 13 countries covered in our paper. The rise in mortality followed three different patterns. First,
while mortality edged upward_if at times imperceptibly and temporarily_during the initial phase of
the reforms in all economies in transition, this "blip" was swiftly reabsorbed in subsequent years in
the Czech Republic, Slovakia and Poland. In a second group of countries (where the increase in the
CDR during the first two transition years was clear, but still contained), as in Bulgaria, the initial rise
stabilized during 1992-4 at a level higher than that observed prior to the transition. The third and
most worrisome pattern of mortality increases was that observed in Russia, Latvia and a few other
members of the former Soviet Union, that is, countries which registered the steepest upswings in the
first reform year. In these countries, death rates accelerated in the second and subsequent years of
the transition (Figure 1).
Fig. 1 Patterns of CDR dynamics in Selected Trandsitional Economies (1989=100)
Source: UNICEF 1995
A substantial part of this pervasive health crisis is attributable to a true epidemic of heart
diseases among middle-aged males. To a lesser degree, it has also been due to an upsurge of
cerebrovascular diseases, lung cancer, cirrhosis and suicide among the same population group.
Smaller yet significant increases in female mortality due to heart diseases and cirrhosis have
contributed to a worsening of the overall health picture. Only for infectious and, in some cases,
respiratory diseases has there been some decline. The increase in mortality has been much more
pronounced among men than among women (Ukraine is the only exception). In Russia, for instance,
the CDR rose two times more quickly among men than it did among women. In addition, "transition
mortality" hit most severely not the traditionally vulnerable groups, namely, children, pregnant and
lactating mothers and the elderly, but rather the working-age population. The greatest relative jump
in death rates occurred among the 35-9 or 40-4 age groups. The largest absolute climb occurred
among men in the 50-9 age group (Table 5a; UNICEF 1994).
While classification problems tend to blur the picture, a large share of the recent rise in
mortality is explained by an epidemic of cardiovascular diseases (Table 6). "External" causes of
death (including poisoning, accidents, suicide and homicide) also explain a sizeable part of the surge
in the CDR_particularly among young men_in most members of the former Soviet Union and
Hungary (Table 7). Less important is the role of cancer, which appears to be dependent on longterm risk-factors. Though important in relative terms, the absolute increase recorded for the
"diseases of poverty" (infectious, parasitic and sexually-transmitted diseases) was very modest, while
there was a generalized decrease or stabilization in the mortality due to respiratory causes (UNICEF
1994).
Tab. 6 Contribution of causes of death to CDR changes, 1989-1994
Source: TransMONEE database
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Tab. 7. Suicides and Homicides among Males aged 20-59: 1994 as % of 1989
Note: * 1993 as % of 1989
Source: TransMONEE database
These large rises in mortality rates among male adults and the widening of life expectancy
differentials between the sexes are cause for serious concern, since they provide a clear indication of
the extreme stress to which these societies are being subjected. From a demographic perspective
they are worrisome because they have further exacerbated the imbalance in the sex ratio and the
dependency ratio, raised the number of incomplete families, increased widowhood and caused
considerable economic losses: all of which reduce the nuptiality and reproductive potential of the
population and therefore tend to "endogenize" the marriage and fertility crisis.
I.2 SIGNIFICANCE OF RECENT CHANGES IN DEMOGRAPHIC BEHAVIOUR
This section tests formally the significance of the demographic changes occurring between the pretransition (1970-89) and the transition (1989-94) periods for the CMR, TFR and CDR. For each
of these variables, a test of predictive failure has been carried out for the nine of the 13 countries
covered by this paper for which it has been possible to extend backward to 1970 the time series for
these three variables. The 1970-94 data have been interpolated by means of one of the following
two functions:
y = a + bŸlog(Time) + [ d 1 Ÿdummy90 + d 2 Ÿdummy91 + d 3 Ÿdummy92 + d 4Ÿ
dummy93 + d 5 Ÿdummy94 ]
Model 1)
y = a + bŸlog(Time) + cŸ(log(Time))2 + [ d1Ÿdummy90 + d 2Ÿdummy91 + d 3Ÿ
dummy92 + d 4Ÿdummy93 + d 5Ÿdummy94 ]
Model 2)
The variables within the square brackets are dummies, equal to 1 for the relevant year and 0 for the
other years, so that their parametres indicate the deviation from the pre-1989 pattern estimated by
the the functional form chosen. For the TFR, data problems have required that the estimation period
be narrowed to 1975-94, except for Russia, Romania and Lithuania, for which the estimation period
is 1970-94. All estimates of the above equations have statistically significant "a", "b" and "c"
parametres and show a good fit, except for Poland in the case of the CMR.
If the t-statistics of d1 , d2 , d3 ,d4 and d5 -expressed in absolute terms- are above the
established absolute threshold determined both by the level of probability chosen (90 or 95%) and
by the degrees of freedom of the estimate, then the actual value is significantly different from that
predicted on the basis of the time trend up to 1989. In addition, if the F-statistic - expressed in
absolute terms - is above the threshold established as above, then the model fails to predict the
correct value of the variable over the entire 1990-4 transition period (Table 8).
Tab. 8 T-statistics of variations from the expected trend and overall F-statisticof predictive failure for the 1990-94
period
Tab. 8.b Forecast errors (actual-expected) as percentage of the expected values: 1990-1994
9
Source: Authors’ calculations based on the TransMONEE database
In the case of the CMR the coefficients of the dummy variables are significant at the 95percent level of probability (unshaded t-statistics) in about two-thirds of the cases. In five cases
(light shaded t-statistics) the t-statistics are significant at between the 90- and 95-percent level, while
in 12 cases (dark-shaded statistics) it is not significant at the 90-percent level (Table 8). It is
interesting to note that the statistical significance of the dummies increases over time, indicating that
the deviation from past nuptiality trends is generally intensifying. As expected, the parametres of the
dummies are generally negative. The only exceptions are those of the 1990 dummies for Romania,
the Czech Republic and Lithuania that indicate positive and statistically significant deviations from
long-term trends, thus corroborating the hypothesis of an "initial matrimonial euphoria" in the first
year of reform in some countries.
The overall F-test of predictive failure (which verifies if the post-transition observations
taken as a whole have been correctly predicted by the 1970-89 time trend) is confirmed in all
countries except Poland, where even the 10-percent drop in the CMR in relation to 1989 does not
appear to be significantly different from that projected on the basis of the long-term trend. In Poland,
in other words, the decline in nuptiality does not appear to be related to the transition, but to longer
term trends in family-formation behaviour.
The test of predictive failure produces slightly stronger results for the TFR than it does in the
case of the CMR (Table 8). Out of 43 t-statistics for the coefficients of the dummy variables
measuring the variation from the expected trend, only 11 are not significant at the 90-percent
probability level, while two others are significant between the 90- and the 95-percent levels. These
results confirm that radical departures from previous reproductive behaviours have taken place in all
nine countries studied, with the exception of Poland and the Czech Republic, in which the deviations
from the long-term trend are generally small and insignificant and in which the overall test of
predictive failure is rejected. However, also in these two countries, the changes in the size and the
sign of the t-statistics in 1992-4 indicate that the behaviour of the TFR might gradually be
approaching the general pattern.
Finally, the test of predictive failure has been applied to the CDR (Table 8). The results are
only marginally weaker than those in the other two cases. The values of the dummy coefficients are
positive (indicating an increase in the CDR greater than that suggested by the long-term trend) and
significantly different from zero in 27 cases, while in four cases the deviation is significant between
the 90- and 95-percent levels of probability. Also in this case the value of the coefficients tends to
rise over time, thus pointing to an aggravation of the mortality crisis. Poland and the Czech Republic
appear almost completely unaffected by the recent mortality crisis. In Hungary the overall predictive
failure test is rejected, though the data suggest that it would have been verified had the test been
applied not to the 1990-4 period but to the 1992-4 period. In Hungary, in other words, the
mortality crisis started taking effect two years after the beginning of the reforms.
In summary, in the 27 possible cases, the test of predictive failure is always successfully
verified, except in Poland for the CMR and TFR, the Czech Republic for the TFR and in these two
countries - and with the qualifications mentioned above - for the CDR (Table 9). Furthermore, the
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test would improve if, instead of using 1989 as a general pre-transition baseline, country-specific
baselines reflecting more accurately the introduction of market reform in each specific situation were
used.
Table 9. Summary statistics of the test of predictive failure for the CMR, TFR and CDR
over the 1990-4 period
Source: Authors’ calculations
Though often showing sizeable variations in relation to the 1989 levels, in Poland and to a
lesser degree in the Czech Republic the main demographic indicators have been basically unaffected
by the comparatively smaller shocks of the last five years. The deviations observed reflect, in other
words, the continuation of a long-term trend and can not be attributed to the problems triggered by
the transition. By and large, this outcome has been expected in the case of the Czech Republic,
which contained and immediately reversed the 1991 surge in poverty, drastically limited the spread
of unemployment and moved relatively smoothly toward the market.
In contrast, these results are somewhat puzzling in the case of Poland. In that country, the
sharp 1990 rise in poverty was not reversed, and registered unemployment stabilized at a high level
(about 16 percent), despite a recovery of GDP in 1992-4. These results may therefore signal that
the transition crisis is less severe than revealed by poverty, wage and unemployment data (which
would tend to overestimate the extent of the economic crisis). But these results may also signal that
the demographic crisis began before 1989, or that positive expectations about the overall outcome
of the transition (favourably influenced by the 1992-4 recovery of GDP) prevailed over the negative
influences of spreading poverty and high unemployment.
In contrast, in the other seven countries the test of predictive failure is accepted for all three
variables, thus confirming that the transition has brought about drastic and sudden changes in familyformation behaviour, fertility and mortality. The countries in which the deviations appear most
marked are Latvia, Estonia and Russia. These results can be extended to the remaining four included
in this paper. Indeed, changes over 1989-94 in Slovakia are similar to those observed in the Czech
Republic, while those in Ukraine, Belarus and Moldova are comparable to those in the other
countries of the former Soviet Union. In conclusion, therefore, in ten of the 13 countries included in
this paper, the economic shocks caused by the transition have induced large and statistically
significant deviations from the long-term trend in the main demographic variables. While the impact is
important_though limited to nuptiality and fertility_in the Czech Republic and Slovakia, only Poland
seems to have been generally unaffected by the population crisis of the transition.
II. CAUSES OF THE TRANSITION'S POPULATION CRISIS
We now examine the causes of these large deviations in demographic variables. We focus, in
particular, on the causal relationship among current economic and social dislocations, social stress
and demographic adjustment.
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In spite of the hopes placed on a rapid move to a market economy, it is now evident that the
transition has met with formidable and unexpected difficulties. All countries have been affected,
though in various degrees, by a large fall in GDP, an inflationary outburst, a collapse in employment,
a steep drop in household incomes, a large surge in income inequality and a sizeable reduction in
social expenditure (Table 10).
Table 10. Selected economic indicators: 1989-1994 overall variation
Notes: * 1989=100, (a) 1989-1993, (b) 1990-1994, (c) 1993, (d) 1992, (e) 1989-1992
Source: TransMONEE Database.
II.1 DETERMINANTS OF THE FALL IN THE CRUDE MARRIAGE RATE
The discussion in Section I suggests that the recent decline in nuptiality is the result neither of a
contraction in the size of the cohorts reaching the age of most frequent marriage, nor (except for
Poland) of factors already at work prior to the transition. In addition, the stability of the mean age at
marriage of women, the fact that the decline in marriage rates has concerned all age groups and the
limited evidence of increases in cohabitation suggest that the present drop in nuptiality is not the
result of a shift toward a "Western marriage pattern". Other factors could be responsible for these
changes, including the following.
(i) Unfavourable changes in the sex ratio. The surge in mortality among young and middle-aged
males (see later) may have worsened the sex ratio in the age bracket of most likely marriage (20-49)
and thus reduced the chances of first marriage or remarriage among women. The empirical evidence
(TRANSMONEE Database, November 1995), however, indicates that only modest variations
have occurred so far in this regard. While this might be due to problems in the yearly computation of
population structure by cohorts and sex (which often relies on theoretical models and not on an
updating based on the civil register), it is likely also that it is too soon to observe statistically
significant changes in the sex ratio.
(ii) Variables measuring economic difficulties of the marriageable population. The
establishment of a new household involves considerable start-up costs (for the ceremony itself, the
purchase or rental of a new house, furniture, household equipment, and so on), while the
maintenance (or reproduction) cost of the new family is, at least at the early phases of the marriage,
higher than those borne by the two families of origin. At the same time, even under normal
circumstances, the life-cycle theory suggests that earnings, savings and access to credit are all
generally lower at a younger age.
The changes over the last five years have generally exacerbated the economics of marriage.
To start with, except for the Czech Republic, registered unemployment rose sharply in 1991 and
1992 in all countries of Central and Southeastern Europe, though it rose only marginally in the
former Soviet Union (Table 10). However, if we account for persons involountarily working parttime, on leave without pay or with only partial wages, this rate would increase to around 12 percent
(UNECE 1994). So far, registered unemployment has started to decline only in Hungary and to
stabilize in Poland.
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In view of these and other measurement problems, it might be preferable to gauge the extent
of the labour market shock by means of changes in the employment rate. This variable captures not
only the surge in unemployment, but also the increase in the number of discouraged workers, early
retirements and childcare leaves. If this measure of labour market change is adopted, the differences
among countries are narrowed, but not eliminated (Table 10).
While employment rates have declined sharply for the entire active population, economic
recession and an increasingly difficult transition from school to work have caused proportionately
greater difficulties for the new entrants in the labour force. While data are not available on the
employment rate by age, the registered unemployment rate (from both the unemployment register
and labour force survey) has generally risen more rapidly among workers in the 15-24 age bracket.
The share of unemployment in this age group within the total varies between 29 and 45 percent,
while this group's share in the entire working-age population is around 20-30 percent.
The economic difficulties of the marriageable population have also been influenced by the
sharp decline in real wages and incomes per capita. Real wages have fallen sharply in all countries of
the region during the first two reform years, though the fall was most pronounced in the countries
where the drop in employment was less marked. In most cases, real wages continued their slide in
the third, fourth and fifth years of transition, though at a slower pace and despite the rise in real
wages in Central Europe since 1994. Even in the countries (such as Poland and Romania) which
experienced a recovery in 1993-4, real wages have either stagnated, or further contracted. Only in
Central Europe has the five-year decline in real wages ended.
Another factor which has rendered marriage more problematic is the increasingly difficult
access to and greater cost of housing and related charges (for heating, electricity, water,
maintenance and so on). To start with, the severe recession of the last five years has seriously
affected the construction sector, particularly the building of public flats (Cornia and Sipos 1991),
thus causing a sharp and generalized decline in the number of new housing units completed per year
(Table 10). Thus, although housing shortages and forced cohabitation were common during the
socialist period, the phenomena have worsened in recent years. Between 1989 and 1994, the
number of new housing units completed dropped by over 70 percent in Bulgaria, Latvia Lithuania,
Estonia, and Moldova, by 67 percent in the Czech Republic and by 52 percent in Poland. In
addition, the liberalization of the rental market and, in some countries such as Russia, the repatriation
of workers and military personnel from other countries have drastically reduced the chances of
securing even minimum housing for new couples. While privatization in housing has favoured the old
tenants, the supply of subsidized housing for young couples has basically dried up, and many new
couples have now to pay open market prices for housing. For example, the average open market
price for housing in provincial Russian cities has grown well beyond the limits of average citizens.
The market price for an apartment of 50 square metres in Khabarovsk was $30,000 in 1994. The
average annual wage in this oblast during this period was about 3 percent of this figure (UNICEF
1995).
(iii) Variables measuring the expectations concerning future living conditions . Marriage
rates have also been affected by worsening expectations about future living standards. We use the
model of "adaptive expectations" to proxy expectation about the future. This is done by combining
13
the lagged value of the unemployment rate and the employment rate, the wage rate and inflation. In
this model, expectations about living standards at the time "t" ("EXPt ") are proxied by average real
wages (ARW) and the employment level (ER) lagged one year and by the current rate of inflation
("CPI_h"). Thus:
Equation 1: EXPt = ƒ(ARWt-1, ERt-1, CPI_ht )
The reason of the introduction of the current values of CPI_h is that, as amply
demonstrated by the literature on Latin America (for instance, see Cardoso 1992), in countries
experiencing very high rates of inflation, expectations are greatly influenced by current changes in the
price level. Though part of this information is included in the computation of wages in real terms
(lagged one year), high inflation per se is perceived as a serious source of instability by most
economic agents. In this regard, the transition has been characterized by sharp increases in the price
level following the puncturing of the inflationary "bubble" inherited from the socialist era, the price
"overshootings" induced by the macroeconomic approaches adopted, and the implementation of
structural reforms (such as price liberalization, the elimination of subsidies and the introduction of the
value-added tax) which always generate sizeable price shocks.
Under conditions of high or hyper-inflation, wages, pensions and child allowances are thus
bound to trail permanently behind the price level, as no indexation system can work meaningfully
under these circumstances. In addition, inflation imposes a highly regressive tax on the population
(Gil-Diaz 1987), rapidly erodes real government resources because of the well-known "TanziOliveira effect", prevents even well-meaning governments from establishing adequate social safety
nets, offers the opportunity for considerable shifts in wage, income and asset distribution and relative
prices, destroys the financial savings of households, and leads to a more than proportional increase
in the prices of those goods and services (such as housing rental, heating charges and goods for
children) that, by pushing up disproportionately the cost of marriage and of raising of a child,
influences the decisions of young couples to marry and have children. Finally, inflation generates
expectations of additional social dislocations due to the introduction of the harsh stabilization
measures normally used to control it.
The results of the econometric analysis in which the above determinants of nuptiality have
been explicitly considered are now presented. In the model employed in this paper, the CMR is
dependent on three sets of variables: a demographic factor (the sex ratio in the 20-49 age group),
the current economic difficulties of the marriageable population (measured by the wage rate, ARW,
the unemployment rate among the 15-25 age group, U15-29, and the availability of housing, which is
proxied by the number of new housing units completed every year, (NHU), and the expectations
about future living standards, EXP, defined above. Thus:
Equation 2: CMRt = ƒ[(SRt ), (ARW t , U(15-24),t , NHUt ) (EXPt )]
An examination of the data, however, shows that the expected worsening in the sex ratio is not
borne out by the available data, thus confirming that these data are obtained by demographic models
which do not express adequately real changes in population structure. This variable is therefore
excluded ex ante from the specification of the model. In addition, incomplete data about U15-24 ,
14
means that this factor must also be omitted and that the impact of the current economic difficulties of
the marriageable population can be expressed only by way of the number of new housing units
completed and the current real wage. Even the option of using the overall rate of unemployment is
not possible because of measurement problems. Finally, to express adaptive expectations about the
future (EXPt ) at the time t, an appropriate variable reflecting the joint impact of changes in the
employment rate and inflation has been developed by means of the "principal components" method.
Though the adaptive expectations represented in Equation 1 also include ARW t-1, it appears that this
variable is significantly correlated with the first principal component of EXPt , thus suggesting that, to
avoid the risk of collinearity in the estimation in Equation 2, ARWt-1 should be removed from the
computation of EXPt .
Therefore, the EXP t variable used in the estimation in Equation 2 is the first principal
component extracted from the variables (CPIzt )-1 and (ERz)t-1 where "CPIz" is the country-specific
standardized consumer price index, and "ERz" is the country-specific standardized employment rate.
The standardization process, which allows problems of scale to be corrected across countries and
variables, is carried out by dividing the value of each variable by the corresponding country-specific
standard deviation. The percentage of variance extracted by the first principal component is high
(from 78 to 98 percent), allowing EXP t to be considered a reliable expectations variable. The
regression analysis has therefore been carried out on the remaining three arguments, as follows.
Equation 2a: CMRt = ƒ(ARWt , NHUt , EXPt )
The equation has been applied to pooled cross-country and time series data over 1989-94
by means of the FGLS procedure (Greene 1990). To avoid the spourius causality due to the similar
trends in the series (expressed in absolute figures) - and therefore also the first-order correlation of
the residuals - and heteroscedasticity problems, the regression has been carried out in first
differences of log. The results are reported hereafter in Table 11.
The results are satisfactory from an econometric perspective. All parametres are
significatively different from zero; the Durbin-Watson statistic indicates a low correlation of the
residuals, and the fit is more than acceptable considering that the regression is carried out in first
differences and on pooled data and as the Hausman test accepts the hypothesis of random effects.
All parametres have the expected sign, including the constant, which would indicate a natural
tendency toward a gentle decline in nuptiality. (This parameter is, however, non-significative.)
Interestingly, it appears that the sum of the elasticities is considerably smaller than 1, suggesting a
less than proportional decline in marriage rates in relation to unitary changes in the determinants. It
also appears that the variables measuring the current economic problems faced by the potential
brides and grooms dominate in broadly equal manner the decision to marry. Indeed, the elasticities
of these two variables explain about 65 percent of the total variation of the CMR.
Tab. 11 Results of the regression analysis, Crude Marriage Rate
II.2. DETERMINANTS OF THE FALL IN THE TOTAL FERTILITY RATE
15
The discussion in Section I suggests that the contraction in the TFR observed over 1989-94 is to be
attributed largely to the cumulative contraction in nuptiality, the current economic difficulties, the
weakening of family support policies, negative expectations about the future and, in Romania,
changes in anti-abortion legislation.
(i) Variables measuring the cumulative effect of the decline in marriage rates on natality.
As noted, declining nuptiality, higher outmigration of young males and greater mortality among
middle-aged males may have contributed to a drop in birth rates by reducing the share of married
women in the most fertile age group and, ceteris paribus, matrimonial fertility. The impact of these
changes was likely imperceptible in the first year or two, but ought to have intensified over time
where changes in nuptiality, male mortality and migration have persisted.
(ii) Variables measuring the current economic difficulties of the population of reproductive
age. In the model used here (see Equation 3 below), the decision to have a child depends on
changes in the cost of raising a child (CPIC) and on the current family income of couples of
reproductive age. This in turn depends on changes in the employment rate, the average wage
(ARW) and other incomes. Over the last five years, these three variables have evolved negatively in
most of the region. The cost of raising a child has skyrocketed because of the more than
proportional increase in the formerly highly subsidized prices of the goods and services consumed by
children (milk, children's clothes, kindergartens, education and medical services). As for the changes
in real wages and incomes, the same arguments developed in II.1 (ii) apply.
(iii) Variables measuring changes in family support policies. Traditionally, most the literature
has emphasized the role of "family-support" policies in the decision to have children (Kamerman and
Khan 1995). In Eastern Europe this support was generally provided in two ways (Zimakova 1994):
through child allowances and the provision of highly subsidized childcare services which were meant
to support women in the workforce in their task of raising and socializing children. To capture these
various effects, an ordinal variable, the "public child support variable" (PCSV), is used here. It
combines three factors: the current real value and coverage of child allowances, the current
percentage of 0-to-2-year-olds with a parent on parental leave or enrolled in crèches (Fajth 1994,
UNICEF 1993), and the current availability of places in public kindergartens, proxied by the
kindergarten enrolment rate.
In most cases, the real value of child allowances has declined, often sharply and often more
quickly than average wages and pensions (UNICEF 1995). The moderating effect of these
allowances on the fall of household incomes has therefore been far less positive than intended. The
fall has been particularly sharp in Latvia and Russia, where child allowances had dropped almost to
zero by the end of 1993.
(iv) Variables measuring expectations about future living standards . Also in this case the
considerations above in Section II.1.(iii) are valid.
In conclusion, the theoretical model presented here to explain the changes in the TFR can be
expressed as follows.
16
Equation 3: TFRt = ƒ[(SRt , (CMRt - CMR89 )t-1),(ARW t , CPIC t ), PCSVt , EXPt-1]
where the cumulative effect of declining nuptiality is captured by the cumulated differences from the
CMR in 1989 (CMRt -CMR1989 ), lagged one year.
An examination of the data indicates, that, as noted above, little change appears to have
occurred in the sex ratio, which is therefore omitted. In addition, the variable CPIC measuring the
cost of raising a child (heroically proxied by the relative price of milk) does not show much of the
expected variation outside the Czech Republic and Slovakia. A more comprehensive variable
weighing the price changes for all the goods consumed by children could be constructed only for
Hungary. Also in this case, therefore, the variable is omitted. The regression analysis has therefore
been carried out on the remaining four arguments.
Equation 3a: TFRt = ƒ[(CMRt - CMR89 )t-1), ARWt , PCSVt , EXPt ]
As in the previous case, all variables have been expressed in first differences of log. The
results of the regression are reported hereafter in Table 12. They are generally satisfactory from an
econometric viewpoint. All parametres are significatively different from zero at a high level of
probability (except for PSCV, which is significant only at the 90-percent level); the Durbin-Watson
statistic and the Hausman test are acceptable.
Tab. 12 Results of the regression analysis, Total Fertility Rate
All parametres have the expected sign and are of a plausible order of magnitude. Also in this
case the sum of the elasticities is considerably lower than unity, suggesting a less than proportional
variation of the TFR in relation to its determinants. It is interesting to note that there is a clear and
highly significant impact of lower nuptiality on natality. The lagged cumulated variation in the former
explains about one-third of the overall variation of the latter. This conclusion contributes further to
the rejection of the view that the decline in birth is due to the adoption of a Western model of
reproductive behaviour. The results confirm that family support policies have a positive but modest
impact (that is, with an elasticity explaining only 16 percent of the overall variation over the entire
sample) on the decision to have a child.
Contrary to the case of nuptiality, expectations do not seem to have a dominant role in the
decision to have a child. However, this impact is likely more marked in the case of the countries
which suffer from generalized gloomy situation, reflecting an overall erosion in post-Soviet state and
greater skepticism about their national economy and civil society.
The estimate show that in Russia, for instance, a rapid stabilization in the rate of inflation and
an increase in employment rates (the main components of expectations about the future) would have
an impact on natality that would be seven times greater than that of a proportionate improvement in
17
family support policies and two times greater than the impact of a similar improvement in the average
real wage (that is, the variable which in this model measures the current economic problems faced
by the potential brides and grooms). More generally, except for family support, all other variables
have far greater elasticities for the countries of the former Soviet Union than they do for the other
countries.
II.3 FACTORS EXPLAINING THE INCREASE IN MORTALITY
As in the usual analysis of mortality (Mosley and Chen 1984), this paper attempts to separate the
causes of the higher mortality rates into changes in risk-factors and in disease control.
(i) Variables measuring changes in risk-factors . Five factors are commonly discussed in the
literature. They are analysed hereafter one-by-one in relation to changes in cause-specific mortality
rates.
- Environmental pollution. While Eastern Europe has long been suffering from severe
environmental contamination, there is no evidence that this factor has contributed to the surge in
mortality observed over recent years. Industrial emissions (IE) have generally been dropping in line
with the recession-induced fall in industrial production (Table 10). In Russia, for instance, the
emission of harmful substances into the air fell by 17 percent between 1990 and 1992 (Nell and
Stewart 1994). In addition, the introduction of sectoral and pricing reforms for energy and raw
materials has contributed to the reduction of emissions per unit of output. Finally, political freedom
has led to stricter restrictions on emissions and other forms of pollution. These conclusions are
reinforced by the decline in mortality due to respiratory diseases observed during the past five years
(Figure 2), suggesting that industrial emissions are associated with respiratory mortality. This
variable is therefore included in the regression analysis below.
Figure 2. vs.
(1989=100)
Respiratory Disease Death Rate vs.Industrial Production, 1990-1994/4
Source: TransMONEE database
- Diet and alcohol consumption. The massive belt-tightening imposed on most households
by the 1989-94 recession should have entailed an important drop in food consumption per capita
(FCC) and, in particular, of alcoholic beverages (which are generally considered "superior" goods).
The drop in food consumption has concerned in particular animal proteins. However, in view of the
high calorie and fat consumption of the past and of the substitution of expensive with cheap sources
of nutrients, the drop in food expenditure has not exacerbated the risk of death due to insufficient
calorie and protein intake, except for a small share of the population (Cornia 1994), as suggested,
for instance, by the rising incidence of tuberculosis and other infectious diseases (UNICEF 1994).
It is unclear, however, whether the average decline in food consumption has concerned also
those unhealthy and fatty items which were normally consumed in excessive quantities in the region
and which are considered an important risk-factor in cardiovascular diseases. There are some
18
indications, in fact, that, while reducing the average overall consumption of meat and sausages per
capita, the substitution effect triggered by the fall in household income has pushed upward the
consumption of cheaper, fatter and lower quality cuts of meat. This issue certainly requires further
investigation and more detailed data than those available now.
As for alcohol consumption (AC), it should be noted that the depressionary effect of the fall
in incomes was offset by the decline in the relative price of alcohol, which left broadly unchanged the
"alcohol purchasing power of wages", and by the liberalization of alcohol import and consumption.
Alcohol intake therefore likely decreased much less than expected on the basis of changes in wages
and incomes (UNICEF 1994). This argument is apparently confirmed by official data which show
no radical changes in consumption except in the Czech Republic and Estonia, where there was an
increase, and of Ukraine and Lithuania, where there was a sharp decrease (Table 13). These data,
however, are biased downward, since they do not adequately reflect the increase in alcohol imports,
production by an increasingly unregulated private sector and home-distillation by consumers.
Indeed, alcohol is generally perceived as a stress-reliever, and people resort to it more frequently in
times of painful social adjustments.
Table 13. Number of Liters of Pure Alcohol Consumed per Person, 1989-94.
Source: TransMONEE database
- Smoking. Smoking (SM) is a main risk-factor in premature deaths due to various types of
cancers and all types of cardiovascular diseases, cirrhosis of the liver and other non-medical fatalities
due to fire, suicide and so on. Over 1989-93, cigarette consumption does appear to have slightly
declined throughout the region, as incomes dropped and prices_particularly of imported goods_
soared, though these data do not include information on the consumption of smuggled cigarettes
(WHO-HFA 1994). Its relation to changes in the CDR indeed suggests almost complete
independence between the two phenomena. In addition, the impact of greater smoking on lung
cancer and cardiovascular mortality would require protracted exposure to this additional risk for a
significant number of years. The variable is therefore omitted from the formal regression analysis.
-Psychosocial stress. Social stress is increasingly recognized as a main factor in deaths
due to heart diseases, ulcers, cirrhosis, alcohol psychosis and suicide, i.e. those specific causes of
death that explain most of the increase in transition mortality. Stress arises in situations where
individuals are called upon to react to new and unexpected situations for which they do not know
the appropriate coping behaviours. This leads to physiological and psychological arousal, provoking
sudden changes in heart rate and blood pressure and in the ability to maintain coherent behaviour.
Stress-related mortality is particularly associated with family breakdown, poverty, job insecurity and
unemployment, and migration and difficult emotional states such as anger, depression and
hopelessness (Eyer and Sterling 1977, Smith 1992, Beale and Nethercott 1985, 1989, Moser et al.
1986, 1987). For instance, the death rates due to heart diseases, suicide and other causes among
divorced men, widowers and migrants are up to two to four times higher than they are among
married men or men who remain in a stable community (Eyer and Sterling 1977). Higher suicide,
stroke and ulcer prevalence has also been found to be higher among the unemployed, as shown, for
instance, by data on the US, Canada and Britain (Eyer and Sterling 1977). In addition, a recent
study has determined that myocardial infarction was more prevalent by a factor of 1.5-1.6 among
19
adults suffering from depression, anger or inability to cope than it was in a control group (Anda et al.
1993).
Stress-related mortality is most frequent and pronounced among young and middle-aged
male adults. Interestingly, women seem to be less susceptible than men to stress-induced death,
possibly suggesting that women are exposed to risks of lower intensity, that social conventions
shelter them from stress more than they do males, or that specific physiological factors give them
greater protection.
All the stressors mentioned above - poverty, unemployment, uncertainty, migration, divorce,
separation, hopelessness and so on - have intensified during the past six years in most of the region.
Poverty rates have risen sharply, particularly for households of the unemployed. For instance, in
Hungary in 1992 the incidence of poverty among households with two unemployed persons was
close to 50 percent (Lakatos 1993, cited in UNICEF 1995). Unemployment has shot up throughout
the region (see Table 10). Large domestic and international migrations_often occurring under very
unfavourable conditions, entailing the redefinition of survival strategies and greater stress_have been
reported in practically all of these countries following the breakdown of states, the return of troops
posted abroad and large flows of refugees fleeing ethnic strife. Finally, marriage and remarriage rates
have fallen sharply, thus leaving larger numbers of adults exposed to greater stress and a higher risk
of mortality. At the same time, family conflicts, domestic violence, loss of self-esteem and alcoholism
have risen dramatically. Divorce rates have, in contrast, remained broadly constant, except in Russia
and Ukraine, where a sharp escalation in this indicator has compounded the risk of a higher
incidence of stress-related ailments among adults.
Economic hardship and greater psychosocial stress have created the conditions for violent
or irrational reactions, non-compliance with regulations and illegal behaviours. Yet, rises in "external"
mortality as large as those described in this paper could not have taken place, particularly in the
countries of the former Soviet Union, if a major collapse of the regulatory, inspection and repressive
apparatuses of the state had not occurred.
Though intellectually stimulating, the variable "psychosocial stress" is not easy to proxy
quantitatively. Poverty rates can in principle provide a good overall measure of stress. They
encompass the effect of many of the factors responsible for social stress (and in particular the loss of
employment, the fall in incomes and the surge in inflation and, indirectly, the economic losses caused
by divorce, widowhood and family conflicts), while likely correlating closely with hopelessness and
loss of self-esteem. Indeed, the largest increases in poverty have generally been recorded in those
countries (Russia, Latvia, Lithuania, Bulgaria, Moldova and so on) which have recorded large
increases in mortality. In addition, poverty appears to have struck most severely the population
groups (working-age people and their dependents) affected by large rises in stress-related mortality.
However, poverty rates can be computed only for those countries and years for which
household budget surveys are available, that is, only half of the countries and years included in our
analysis. Furthermore, substantial differences in the quality of the poverty rates to be used (even
when these have been obtained using identical methodologies) and their average lower reliability in
relation to mortality or other data would introduce a large but unknown bias in the estimates here.
20
The use of this variable as a measure of psychosocial stress would thus entail a huge loss of degrees
of freedom and make the estimates less efficient. In addition, poverty rates may not adequately
reflect the extent of stress because of their inability to capture the "depth" of poverty and the impact
of very high inflation on the anxiety and tension of consumers and on their financial assets.
For all these reasons, psychosocial stress is proxied here by means of an "economic stress
index" (ESI) reflecting the joint impact of other variables on which information is available for a
greater number of countries and years, for example, the average real wage index (ARW), the
employment rate (ER) and the rate of inflation (CPI_h). The use of a "synthetic variable" (ESI)
summarizing the impact of these three variables, rather than the use of any single one of them, is
dictated by the fact that the economic impact of the transition has been quite different from one
country to another. Employment rates, for instance, have contracted significantly in Central Europe,
but not in the countries of the former Soviet Union. The latter, in turn, have experienced average falls
in real wages that are far more pronounced than those in the other countries. In general, inflation has
been much higher in the latter than it has in the former group of countries. Here, the economic stress
index (ESIt ) is calculated as the first principal component extracted, for each country, from the
following variables: ERzt , ARWzt and (CPIzt )-1, where, as in the case of the CMR, the suffix "z"
indicates that the variables have been standardized by the relevant country- and variable-specific
standard deviation. The values of ESI, both current and lagged one year, appear to correlate
significantly with CDR (Figure 3).
Fig. 3 Economic Stress Index vs. Crude Death Rate
(ii) Variables measuring changes in disease control. Detailed analyses of the health sector and
of the mortality rates of the hospitalized population (Davies 1993) indicate that in several transitional
economies, the recent increase in mortality may also be due to the contraction of already low health
expenditures and the subsequent decline in access to health care, the unavailability of inputs and the
diminishing effectiveness of the fragile health system inherited from the socialist era in the face of
sharp increases in risk-factors. Real public health expenditures dwindled, except for those in the
Czech Republic, Poland and Hungary (UNICEF 1994). Past achievements have been protected or
improved upon in Central Europe, but appear to have deteriorated in Romania, Bulgaria, Russia,
Ukraine and most countries of the former Soviet Union.
In addition, total public health expenditure declined more rapidly than revealed by the data
on government expenditure data owing to the transition-induced fall in the outlays of trade unions,
the military and large enterprises which, in the past, assigned considerable resources to health care.
At the same time, with the incipient marketization of medical care, more resources are now being
assigned by households to health care. While these expenditures can sustain the care of the better off
people, they have only modest effects on the health care of the majority.
The decline in health expenditure has generally led not so much to staff dismissals, as to
sharp cuts for wages, infrastructure, the purchase of new equipment and the maintenance of
outdated equipment. In a period of rapid increases in morbidity due to diseases which require
intensive care, this trend has exacerbated the traditional gap between the "extensive health
approach"
21
and the mature mortality pattern of the region (Eberstadt 1990). The sharpest disruption of health
services, however, was caused by a growing shortage of inputs due to multiple supply, price and
budgetary shocks.
In view of the above discussion, the theoretical model presented here should be specified as
follows.
Equation 4: CDRt = ƒ[(IEt , FCCt , AC t , SMt ), ESIt , HEt ]
Due to the data availability problems discussed above for fat consumption (FCC) and
alcohol consumption (AC), as well as for the long-lagged effect of smoke consumption (SM) on
health, it has been necessary to modify the above model. Data on smoking and alcohol consumption
are apparently orthogonal to the CDR. Detailed data on fat consumption are not available and could
therefore not be included, though the presumed decline should have affected cardiovascular
mortality in the opposite direction than that observed. Equation 4 has therefore been expressed as
follows.
Equation 4a: CDRt = ƒ(IPt , ESIt-1, HEt )
where the explanatory variables include industrial emissions (IE) proxied by industrial production,
the index of real health expenditure per capita (HE) and the "economic stress index" (ESI) lagged
one year. A one year lag has been introduced because ESI could have an impact on the CDR that is
distributed over time. The lagged effect of the ESI should be therefore taken into consideration.
Nonetheless we had to keep in mind two factors in our search for an appropriate specification: the
limited time horizon of the estimate that drastically truncates the possibility to use distributed lags,
and the presence of autocorrelation in the series ESI. Because of these factors, and after various
tests on the appropriateness of specification, we have introduced the ESI with only one year lag.
As in the case of the estimates of the CMR and TFR, the three variables are expressed in
first differences of logarithms in order to eliminate spourius causality and heteroscedasticity. The
results of the regression_carried out on pooled cross-country and time series data over 1989-94 by
means of the FGLS procedure_are reported hereafter in Table 14a. As one can see the DurbinWatson statistic and Hausman test of the regression model 4a are not entirely satisfactory. The
parametres of ESIt and HEt have the expected sign and are significatively different from zero.
However, the parameter of IEt is not statistically significant. It has therefore been omitted and the
regression repeated (Table 14b), leading to a somewhat better fit, more significant parametres and a
decisive improvement in the other statistical tests. The size and elasticities of the parametres clearly
indicate that ESIt-1 explains a greater share of the observed variation in mortality. Indeed, the
elasticity of health expenditure per capita is about 50 percent of that of the economic stress index.
Tab. 14a. Results of the regression analysis, Crude Death Rate
Tab. 14b. Result of the regression analysis, Crude Death Rate
IV. TENTATIVE CONCLUSIONS
22
Though data and estimation problems suggest considerable caution and while further work in this
area is called for, a few unambigous conclusions appear from the above analysis:
- While important demographic changes occurred in the 1970s and 80s, in three-quarters of
the cases examined the recent shifts in nuptiality, fertility and mortality show large, growing and
statistically significant variations from past trends. Only Poland and the Czech Republic appear to be
little affected by the population crisis of 1989-94.
- There is little or no evidence that these drastic variations are the result of shifts toward
Western models of marriage or reproductive behaviour. They are instead due to negative shifts in the
economic circumstances of the marriageable population and of the families already formed, and in
particular to the fall in real wages and rising cost of housing and other goods needed to establish and
maintain a family. They are also due to the deterioration in and the modest impact of family policies
on reproductive behaviour. In contrast, expectations about the economic outcomes of the current
crisis appear to exert a sizeable influence on the decision to marry and, particularly, to have a child.
- None of the traditional risk-factors (environmental degradation, smoking, diet and alcohol
consumption) explains much of the recent increase in mortality, either because there is sufficient
evidence that the variable in question moved in a favourable direction (as in the case of industrial
emissions and smoking), or because the existing information is ambiguous or unrelated with the
mortality outcomes. In this area, however, data availability and reliability problems blur the picture
and demand that major efforts in the proper surveying are undertaken.
- The transition has been accompanied by a number of unexpected effects which either
reflect initial favourable perceptions of the transition (as in the case of the initial "marriage euphoria
effect") and significant regional variations. The countries of the former Soviet Union appear to have
been affected more than proportionally, possibly due to more negative expectations about the future
and a greater erosion of public institutions. These factors, untested in this paper, possibly explain the
much larger variations in natality and mortality (in relation to unitary changes in wages, consumer
prices and so on) relative to the countries of Eastern and Central Europe.
- Except in Poland, the above changes have led to a net natural decrease of the population
and to a series of undesirable demographic developments which, unless they are reversed in the
immediate future, are bound to affect negatively welfare levels and economic growth over the
medium and long term. Indeed, over time, the downward spiral in nuptiality, fertility and mortality
tends to become self-reinforcing, so that the observed demographic deteriorations risk becoming
self-perpetuating.
- The close connection established in this paper between economic events, public policies
and demographic outcomes implies that the current population crisis will not improve if the ongoing
process of impoverishment continues and if public policy remains either aloof (on the belief that these
trends reflect consistent decisions of freer and more mature individuals gradually adopting Western
lifestyles), or continues to be focused on narrow sectoral responses in the areas of lifestyles, health
intervention and family support measures. This paper has underscored the importance of inflation
control, support for minimum wages and family and housing allowances (all measures entailing
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adequate tax collection and regulatory measures, among others), as well as of interventions for the
control of psychosocial stress to stabilize and reverse the recent changes in nuptiality, fertility and
mortality.
- Ceteris paribus, a fairly rapid turn-around in nuptiality and fertility could take place if the
economic climate improves, howsoever modestly. In this regard, prospects for poverty alleviation
appear not entirely negative, and a broadbased, equitable recovery could reabsorb much of the
existing poverty and psychosocial stress relatively rapidly. Indeed, in view of the smallness of the
"poverty gap" and high level of "human capital" in relation to other regions of the world, a rapid
boost of the economy and the lifting of many people out of poverty appear at hand. While a
continuation of the present population crisis is plausible or even likely in the countries of the former
Soviet Union, the introduction of broadbased and pro-active policy measures along the lines
sketched in this paper could lead to fairly rapid demographic stabilization and recovery in most
countries of Central Europe.