T
ennessee
POLICY RESEARCH BRIEF
Vol. 1, No. 1, September, 2001
GENERAL DEMOGRAPHIC CHANGES
IN TENNESSEE, 1990-2000
Understanding the Economic Implications
Prepared by:
Paula Dowell, Ph.D.
Center for Business and Economic Research
"The Tennessee State Data Center"
The University of Tennessee, Knoxville
http://cber.bus.utk.edu
Center for Business and Economic Research
"The Tennessee State Data Center"
The University of Tennessee, Knoxville
http://cber.bus.utk.edu
CBER STAFF
Director
William F. Fox
Associate Director
Matthew M. Murray
Assistant Professor
Donald Bruce
Research Associates
Vickie Cunningham
Paula Dowell
Patricia Price
Joan Snoderly
Angela Thacker
Betty Vickers
Program Resource Specialist
Betty Drinnen
Publications Specialist
Stacia Couch
Graduate Research Assistants
Karie Barbour
John Deskins
John Dupree
Sanela Porca
Josh Ray
Tami Richards
For further information, contact CBER at
1000 Volunteer Blvd., Suite 100 Glocker Bldg.,
Knoxville, TN 37996-4170;
telephone (865) 974-5441; fax (865) 974-3100.
UT Printing Authorization No. E01-1490-006-02
SELECTED PUBLICATIONS
An Economic Report to the Governor of the State of
Tennessee on the State’s Economic Outlook. Annually.
The Impact of TennCare: A Survey of Recipients.
Annually.
Tennessee Business and Economic Outlook. Quarterly.
Tennessee Economic Overview. Monthly.
State Data Center Newsletter. Semi-Annually.
Tennessee Statistical Abstract 2000. Biennially.
Families First Case Characteristics Study. Biennially.
Welfare Policies in Tennessee and Eight Neighboring
States. July 2001.
Economic Impacts of the U.S. Department of Energy for
Fiscal Year 2000. May 2001.
An Analysis of Reentry to Families First. April 2001.
The Economic Benefits of the U.S. Department of Energy
for the State of Tennessee, Fiscal Year 1999. May 2000.
A Profile of the U.S. Department of Energy’s
Contribution to the State of Tennessee. March 2000.
A Review of Tennessee’s Child Support Enforcement
Program. February 2000.
Infrastructure and the Tennessee Economy. August 1999.
A Profile of the Automobile Sector in the U.S. and
Southeastern States. June 1999.
Population Projections for Tennessee Counties &
Municipalities, 2000-2020. March 1999.
Business Recruitment and its Impact on the Knoxville
and Knox County Economies. May 1997.
An Economic and Fiscal Analysis of Industrial
Development in Anderson County. March 1997.
I
NTRODUCTION
The recent release of 2000 Census data by the U.S. Census
Bureau indicates that a wave of demographic change is rippling across
the state of Tennessee. In the wake of this wave of change lies the
potential for significant effects on the state’s economy. The significance
of the demographic transformation is heightened by the tide of
technological advances being made in the workplace, resulting in an
economy comprised of new industries and jobs. Combined, the
demographic and technological transformations are likely to have
profound effects, forever changing the economic landscape of
Tennessee.
The changing demographics
in the state have many
important implications for
Tennessee.
The changing demographics in the state have many important
implications for Tennessee, including changes in the labor force, shifts
in competitive advantages, changes in the demand for public services,
and modifications in the industrial structure of the economy. Articulating
the patterns of demographic changes occurring across the state will
provide important insights into the issues that policymakers and
businesses will confront as the impact of the evolution ripples through
the economy. The current report represents the first in a series of
policy briefs to be produced by the Center of Business and Economic
Research at the University of Tennessee. The purpose of the series is
to facilitate the understanding of the underlying implications of the
demographic and economic shifts that have occurred in Tennessee
during the last decade, with the first report focusing on general
population changes.
The wave of demographic change encompasses more than
mere changes in population numbers. In fact, it is the characteristics
behind the numbers that will potentially have the greater impact on the
future of Tennessee. Demographic factors that influence economic
activity include changes in age, gender, race, ethnic background,
education, skills, dispersion, locality, family size, household composition
and housing tenure. The following sections will examine the changes
in the demographic profile of Tennessee from 1990 to 2000.
UNIVERSITY OF TENNESSEE
1
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
P
OPULATION
The population growth rate in
the state outpaced the nation
as a whole.
Tennessee is the sixteenth most populous state in the U.S., up
from eighteenth in 1990. It is estimated that there were nearly 5.7
million people residing in Tennessee in 2000, an increase of 16.7
percent or 812,098 residents since 1990. The population growth rate
in the state outpaced the nation as a whole as evidenced by a national
growth rate of 13.2 percent (see Figure 1).1
Table 1 displays the states ranked by population in 2000 as
well as comparative data for 1990. In terms of population change
during the decade, Tennessee experienced the twelfth largest numeric
increase and the fourteenth largest population percentage increase.
California retained the top spot as the most populous state while New
York slipped a spot to third, allowing Texas to claim the number two
position. The fastest growing state in the U.S. from 1990 to 2000
was Nevada as it expanded by an amazing 66.3 percent, increasing
from a population of 1.2 million in 1990 to an estimated 2.0 million in
2000.
UNIVERSITY OF TENNESSEE
2
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Table 1: States Ranked by Population, 2000
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
(NA)
50
(NA)
Area
California
Texas
New York
Florida
Illinois
Pennsylvania
Ohio
Michigan
New Jersey
Georgia
North Carolina
Virginia
Massachusetts
Indiana
Washington
Tennessee
Missouri
Wisconsin
Maryland
Arizona
Minnesota
Louisiana
Alabama
Colorado
Kentucky
South Carolina
Oklahoma
Oregon
Connecticut
Iowa
Mississippi
Kansas
Arkansas
Utah
Nevada
New Mexico
West Virginia
Nebraska
Idaho
Maine
New Hampshire
Hawaii
Rhode Island
Montana
Delaware
South Dakota
North Dakota
Alaska
Vermont
District of Columbia
Wyoming
United States
Census Population
April 1, 2000
April 1, 1990
33,871,648
29,760,021
20,851,820
16,986,510
18,976,457
17,990,455
15,982,378
12,937,926
12,419,293
11,430,602
12,281,054
11,881,643
11,353,140
10,847,115
9,938,444
9,295,297
8,414,350
7,730,188
8,186,453
6,478,216
8,049,313
6,628,637
7,078,515
6,187,358
6,349,097
6,016,425
6,080,485
5,544,159
5,894,121
4,866,692
5,689,283
4,877,185
5,595,211
5,117,073
5,363,675
4,891,769
5,296,486
4,781,468
5,130,632
3,665,228
4,919,479
4,375,099
4,468,976
4,219,973
4,447,100
4,040,587
4,301,261
3,294,394
4,041,769
3,685,296
4,012,012
3,486,703
3,450,654
3,145,585
3,421,399
2,842,321
3,405,565
3,287,116
2,926,324
2,776,755
2,844,658
2,573,216
2,688,418
2,477,574
2,673,400
2,350,725
2,233,169
1,722,850
1,998,257
1,201,833
1,819,046
1,515,069
1,808,344
1,793,477
1,711,263
1,578,385
1,293,953
1,006,749
1,274,923
1,227,928
1,235,786
1,109,252
1,211,537
1,108,229
1,048,319
1,003,464
902,195
799,065
783,600
666,168
754,844
696,004
642,200
638,800
626,932
550,043
608,827
562,758
572,059
606,900
493,782
453,588
281,421,906
248,709,873
Change, 1990 to 2000
Numeric
Percent
4,111,627
13.8
3,865,310
22.8
986,002
5.5
3,044,452
23.5
988,691
8.6
399,411
3.4
506,025
4.7
643,147
6.9
684,162
8.9
1,708,237
26.4
1,420,676
21.4
891,157
14.4
332,672
5.5
536,326
9.7
1,027,429
21.1
812,098
16.7
478,138
9.3
471,906
9.6
515,018
10.8
1,465,404
10.0
544,380
12.4
249,003
5.9
406,513
10.1
1,006,867
30.6
356,473
9.7
525,309
15.1
305,069
9.7
579,078
20.4
118,449
3.6
149,569
5.4
271,442
10.5
210,844
8.5
322,675
13.7
510,319
29.6
796,424
66.3
303,977
20.1
14,867
0.8
132,878
8.4
287,204
28.5
46,995
3.8
126,534
11.4
103,308
9.3
44,855
4.5
103,130
12.9
117,432
17.6
58,840
8.5
3,400
0.5
76,889
14.0
46,069
8.2
-34,841
-5.7
40,194
8.9
32,712,033
13.2
Source: U.S. Census Bureau, http://factfinder.census.gov
UNIVERSITY OF TENNESSEE
3
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
C
OUNTY
Middle Tennessee experienced
the most dramatic increase in
population, followed by East
Tennessee.
POPULATIONS
Population growth varied considerably within Tennessee from
1990 to 2000, as county population growth rates ranged from a low of
0.7 percent in Hancock County to a high of 56.3 percent in Williamson
County. Figure 2 depicts the population growth rates by county. Middle
Tennessee experienced the most dramatic increase in population,
followed by East Tennessee. Meanwhile, West Tennessee displayed
the most modest increase as nine counties in the region realized
population growth rates under ten percent. Another notable trend is
that in the state’s four largest MSAs, the core county generally
witnessed significantly smaller population growth compared to the
surrounding MSA counties. For example, Shelby County, which is home
to Memphis, experienced an 8.6 percent increase in population from
1990 to 2000 compared to 36.5 percent in Tipton County and 12.7
percent in Fayette County. Similarly, the population of Knox County
increased by 13.8 percent compared to increases of 39.4 percent
and 23.1 percent in Sevier County and Blount County, respectively.
Despite experiencing lower than average population growth
during the last decade, Shelby County remained the state’s most
populous county with a population of 897,472 in 2000 (see Figure 3).
Davidson and Knox Counties retained the second and third spots with
populations totaling 569,891 and 382,032, respectively. Pickett
County, with a total of 4,945 residents, has the smallest population.
A
GE
The data suggest that
Tennessee residents are
slightly older than the
national average.
UNIVERSITY OF TENNESSEE
CHARACTERISTICS
There has been much discussion about the aging of America
and the associated impacts on the economy. In 2000, the median
age of Tennessee residents was 35.9 years compared to a median
age of 33.5 years in 1990. This represents an increase of 2.4 years in
median age for the state since 1990. By comparison, the median age
for the U.S. in 2000 was 35.3 years, an increase of 2.5 years from the
1990 level of 32.8 years. The data suggest that Tennessee residents
are slightly older than the national average. However, in order to gain
a clearer understanding of the manner in which the state’s population
is aging relative to the rest of the U.S., a more detailed analysis of
population by age is required.
4
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
UNIVERSITY OF TENNESSEE
5
Shelby
897,472
Tipton
51,271
Crockett
14,532
Fayette
28,806
Hardeman
28,105
Benton
16,537 Humphreys
17,929
McNairy
24,653
Hardin
25,578
Wayne
16,842
Dickson
43,156
Lawrence
39,926
Lewis
11,367
Giles
29,447
Maury
69,498
Moore
5,740
Bedford
37,586
Coffee
48,014
Cumberland
34.7%
Fentress
13.3%
12,367
Marion
27,776
Anderson
4.5%
Scott
21,127
Polk
17.6%
McMinn
15.6%
Polk
16,050
McMinn
49,015
Blount
105,823
Meigs
11,086
Monroe
38,961
Roane
51,910
Loudon
39,086
Sevier
39.4%
Sevier
71,170
Jefferson
44,294
Unicoi
17,667
Washington
107,198
100,000 or more
50,000 to 99,999
9,000 to 49,999
C
5
Sullivan
153,048
Less than 9,000
Greene
62,909
Hawkins
53,563
30.0% or more
20.0% to 29.9%
10.0% to 19.9%
Cocke
33,565
Grainger
20,659Hamblen
58,128
Unicoi
6.8%
Washington
16.1%
Sulliv
6.6%
Less than 10%
Greene
12.6%
Hawkins
20.2%
Cocke
15.2%
Hancock
6,786
Jefferson
34.1%
Claiborne
29,862
Union
17,808
Knox
382,032
Anderson
71,330
Campbell
39,854
Meigs
38.0%
Monroe
27.6%
Blount
23.1%
Hancock
.7%
Grainger
20.8% Hamblen
15.2%
Claiborne
14.2%
Union
30.0%
Knox
13.8%
Campbell
13.6%
Roane
9.9%
Loudon
25.1%
Morgan
19,757
Hamilton
Bradley
307,896 87,965
Grundy Sequatchie
14,332 11,370
Rhea
28,400
Cumberland
46,802
Warren Van Buren
5,508
38,276
Bledsoe
White
23,102
Fentress
16,625
Pickett
4,945
Overton
20,118
Putnam
62,315
Jackson
10,984
Clay
7,976
Marion
11.7%
Scott
15.1%
Morgan
14.2%
Hamilton Bradley
7.8% 19.3%
Grundy Sequatchie
7.2%
28.3%
De Kalb
17,423
Cannon
12,826
Franklin
39,270
Wilson
88,809
Rutherford
182,023
Lincoln
31,340
Marshall
26,767
Williamson
126,638
Davidson
569,891
White
15.0%
Putnam
21.3%
Overton
14.1%
Pickett
8.7%
Warren Van Buren
13.7%
16.0%
Bledsoe Rhea
27.9% 16.7%
Smith
17,712
Macon
20,386
Trousdale
7,259
Moore
21.6%
Sumner
130,449
Lincoln
11.3%
Franklin
13.1%
Coffee
19.0%
Clay
10.2%
Jackson
18.1%
De Kalb
21.3%
Smith
25.2%
Macon
28.2%
Rutherford
Cannon
53.5%
22.5%
Wilson
31.2%
Sumner
26.3%
Bedford
Marshall 23.6%
24.3%
Robertson
54,433
Giles
14.4%
Maury
26.8%
Williamson
56.3%
Cheatham
35,912
Montgomery
134,768
Lawrence
13.1%
Lewis
22.9%
Hickman
22,295
Houston
8,088
Stewart
12,370
Wayne
20.9%
Henderson
Perry
25,522 Decatur 7,631
11,731
Carroll
29,475
Chester
15,540
Madison
91,837
Gibson
48,152
Henry
31,115
Hardin
13.0%
Robertson
31.2%
Cheatham
32.3%
Davidson
Dickson
11.6%
23.1%
Montgomery
34.1%
Hickman
33.1%
Benton
13.8% Humphreys
13.5%
Houston
15.2%
Henderson
Perry
16.8% Decatur 15.4%
12.0%
McNairy
9.9%
Weakley
34,895
Henry
11.6%
Carroll
7.1%
Chester
21.2%
Madison
17.8%
Hardeman
20.2%
Obion
32,450
Haywood
19,797
Dyer
37,279
7,954
Lake
Weakley
9.1%
Gibson
4.0%
Crockett
8.6%
Obion
2.3%
Haywood
1.9%
Fayette
12.7%
Lauderdale
27,101
Shelby
8.6%
Tipton
36.5%
Lauderdale
15.4%
Dyer
7.0%
Lake
11.6%
Stewart
30.5%
Trousdale
22.6%
Figure 2: Percentage Growth
in Population, by County:
1990 to 2000
Figure 3: Numeric Population
by County: 2000
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
The biggest shift in terms of
the age of Tennessee's
population during the last
decade was the increase in
the number of residents
aged 45 to 54 years.
Table 2 provides a breakdown of the population of Tennessee
and the U.S. by age for 1990 and 2000. In general, the population of
both the state and the nation has grown older as evidenced by a larger
percentage of total population aged 45 and older. While the state’s
population is generally older than the national average, Tennessee has
a higher percentage of residents in the upper middle-aged range and
lower at the extremes (i.e., under 20 and over 65). Overall, the biggest
shift in terms of the age of Tennessee’s population during the last
decade was the increase in the number of residents aged 45 to 54
years combined with the decline in the percentage of residents under
24 years of age. This is likely the result of the migration of the working
age population, which is influenced by characteristics of both the region
and individual. For example, individuals that are more educated with
white-collar occupations and fewer family responsibilities tend to have
a higher probability of moving, thus increasing the likelihood that
individuals aged 21 to 24 and 45 to 54 will move. Both the increase in
the percentage of Tennessee’s population comprised of individuals
aged 45 to 54 and the decline of individuals aged 21 to 24 are likely
attributable to job-related migration patterns.
Table 2: Population by Age: Tennessee and the United States,
1990 and 2000
Age Group
20 years and
under
21 to 24 years
25 to 44 years
45 to 54 years
55 to 59 years
60 to 64 years
Over 65 years
Tennessee
2000
1990
United States
2000
1990
28.9
29.8
30.0
30.3
5.4
30.2
19.4
5.2
4.2
12.4
5.9
31.8
15.4
4.5
4.4
12.7
5.3
30.2
19.1
4.8
3.8
12.4
6.0
32.5
14.5
4.2
4.3
12.6
Source: U.S. Bureau of the Census, Census 2000 and Census 1990.
E
CONOMIC IMPLICATIONS OF
AGE CHARACTERISTICS
The economic effects of population growth have been a topic
of much debate throughout the later half of the twentieth century. Most
recently, the debate has focused on the contrasting effects of population
growth on per capita income growth. Untangling the offsetting effects
is at the core of the debate. On one hand, negative impacts of
moderate population growth can arise from diminishing returns to
capital, leading to a negative correlation between population growth
UNIVERSITY OF TENNESSEE
6
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
and income growth. Conversely, induced innovation and feedback
effects2 can mean that population growth has a positive impact on
economic growth. In Tennessee, strong investment in capital throughout
the nineties has helped the state absorb the population growth without
experiencing the negative impacts of diminishing returns. As a result,
population growth has had a net positive effect on economic growth.
Understanding the underlying economic-demographic
relationships of population growth requires articulation of the
components of demographic changes. For example, growth rates of
population by age group provide insight into the potential costs and
benefits associated with population growth within a region.
Traditionally, large percentages of total population under the age of 20
have been associated with lower rates of per capita income growth.
The negative impacts of high birth rates on economic growth arise
from the fact that younger populations represent resource-using
dependents that have yet to contribute to the productivity of society.
Similarly, the percentage of the population over the age of 65 has been
found to have a negative impact economic growth.3 Table 3 displays
population growth rates by age group for Tennessee from 1990 to 2000.
As can be seen, the number of residents aged 20 to 24 was the slowest
growing sector of the state’s population, as it increased by only 5.0
percent. The number of residents aged 25 to 44, which expanded by
10.6 percent, represents the second lowest growing sector in the state.
The largest growing age group was comprised of individuals aged 45
to 54 followed by those aged 55 to 59.
Population growth has had a
net positive effect on
economic growth in
Tennessee.
Table 3: Population Growth Rates by Age Group
for Tennessee, 1990 to 2000
Age Group
Under 20 years
Growth Rate
13.4
20 to 24 years
5.0
25 to 44 years
10.6
45 to 54 years
49.5
55 to 59 years
33.0
60 to 64 years
12.0
Over 65 years
13.7
Source: Calculations conducted using data obtained from the
U.S. Census Bureau.
UNIVERSITY OF TENNESSEE
7
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
The growth of population by
age group played a
significant role in the
expansion of the state's
economy during the nineties.
The growth of population by age group played a significant role
in the expansion of the state’s economy during the nineties. The slower
than average growth rate in population under age 20 and over age 65
minimized the negative effects of population growth associated with
dependent, public resource-consuming individuals. At the same time,
the strong growth in persons aged 45 to 59 and still in their productive
years has increased the favorable effects of population growth through
their labor-force participation and private-sector consumption. Helping
to maximize the positive impact of population growth is the fact that
the fastest growing population group is also in the stage of life that is
normally associated with lower demands for public resources.
An alternative method of assessing the effects of different age
groups is to evaluate dependency ratios. Youth dependency ratios
are calculated as the ratio of the total population that is under a
specified age (normally between 15 and 20) to the total population in
the productive years of life (normally between 15[to 20] and 64). Elderly
dependency ratios are typically defined as the ratio of the total
population that is over the age of 65 to the total population in the
productive years. In Tennessee, the youth dependency ratio for persons
under the age of 20 fell from 47.8 percent in 1990 to 45.6 percent in
2000. Likewise, the elderly dependency ratio fell from 21.5 percent to
20.5 percent during the same time period. These data are another
way of demonstrating that Tennessee’s population change should allow
strong economic performance.
However, what was good for
the nineties may prove more
costly in the future.
Population growth also has important implications for
government spending. Empirical studies have shown that increases
in total population can lead to scale economies in both the provision
and consumption of public goods.4 However, scale economies are
typically associated with populations that are much smaller than that
of Tennessee. Increases in population can also have negative impacts
on the size of government. Both young age and old age dependency
ratios have been found to have a statistically significant and positive
effect on government spending.5 Increases in the young age ratio will
lead to an increase in government size primarily through the increased
demand for education for school age children. An increase in the elderly
dependence ratio can lead to an expansion in the size of the public
sector due to increased expenditures on transfer payments and medical
care. The trend in both dependency rates in Tennessee is favorable
to smaller increases in public spending.
However, what was good for the nineties may prove more costly
in the future. If the state’s population continues on the same trend, the
elderly dependency ratio is likely to increase with the aging of the
UNIVERSITY OF TENNESSEE
8
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
population in their 50s, leading to reduced economic growth.
Additionally, the fact that the population of people aged 20 to 24 and
those aged 24 to 44 grew at a rate below the statewide average
suggests that Tennessee has a disadvantage in attracting and retaining
residents in these vital age groups. Combined with decreasing youth
dependency rates, inability to garner residents aged 20 to 44 could
potentially lead to reductions in the size and quality of the state’s labor
force.
P
OPULATION
DENSITY
Population density of Tennessee increased from 118.3 people
per square mile to 138.0 people per square mile between 1990 and
2000. This represents, on average, an additional 19.7 people per
square mile. In comparison, the population density for the U.S. as a
whole increased from 70.3 people per square mile to 79.6 people per
square mile.
From a policy perspective, the higher than average increase in
population density has some potentially strong implications. First,
higher population densities have long been associated with higher
levels of economic growth, especially in industrialized countries.6 The
underlying explanation for the positive effect of population density is
the effect of urbanization. Higher population densities translate into
higher degrees of urbanization, which lead to agglomeration
economies and increased efficiency, thereby, making higher levels of
economic growth possible. However, if population density continues
to increase, economies of scale may give way to diseconomies of
scale, leading to decreased output and economic growth. Fortunately,
Tennessee is not in danger of that occurring in the foreseeable future
since the diseconomies do not typically set in until population densities
reach levels much beyond the state’s current levels. Still, some cities
within the state are more at risk for potential diseconomies or
inefficiencies associated with rapidly growing population densities
relative to others. For example, rapidly growing communities in Middle
Tennessee may find themselves suffering from growing pains in terms
of negative impacts on continued economic expansion due to dramatic
increases in population densities during the last decade. The inability
to fully absorb the additional pressures on the resources of the
community will lead a slowing or even reversing of the current economic
expansion. However, even for these communities, it is likely to take
several more decades of similarly strong population growth to reach
the point of diseconomies.
UNIVERSITY OF TENNESSEE
9
Higher population densities
have long been associated
with higher levels of
economic growth.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
The net effect of an increase
in population density is
smaller increases in
government spending.
A second major economic implication of population density is
the impact on government size. There are two opposing effects of
population density on the level of government spending. First, an
increase in population density can lead to economies of scale in the
provision and consumption of public services, thus leading to smaller
increases in government. That is, increased population density leads
to smaller government size in terms of total output. For example,
provision of sewer and water systems enjoys economies of scale
because the average cost of providing a viable system will decrease
for the individual taxpayer as population density grows because the
cost can be spread out over more taxpayers. Hence, the benefits of
providing water and sewer systems are more likely to be greater than
the costs to an individual taxpayer in densely populated areas relative
to sparsely populated areas. As a result of economies of scale, it is
more efficient to provide public services that require substantial capital
outlays in more densely populated areas.
However, there is a second, contrasting impact of population
density on government size. At some point, higher population densities
could potentially lead to diseconomies of scale in the production and
consumption of state-provided services, leading to an increase in the
size of government. For example, increased population densities can
lead to congestion costs associated with the consumption of public
services. Too many people trying to take advantage of a state-provided
program or service can lead to increased costs to the users in terms
of time, thus reducing the net benefits of the program and requiring
government to devote more public resources to the program or service.
Empirical evidence pertaining to industrialized countries
suggests that the size-reducing influence of increased population
density arising from economies of scales more than offsets the sizeincreasing influence arising from diseconomies of scale. In other words,
the net effect of an increase in population density is smaller increases
in government spending.
S
EX AND
RACE CHARACTERISTICS
In the U.S., variations by sex started to even out as the
percentage of male population rose from 48.7 percent in 1990 to 49.1
percent in 2000, resulting in a corresponding decline in the female
share from 51.3 percent to 50.9 percent. The Tennessee change was
slightly smaller with the share of males rising from 48.2 percent in 1990
to 48.7 percent in 2000.
UNIVERSITY OF TENNESSEE
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CENTER FOR BUSINESS AND ECONOMIC RESEARCH
A much more significant shift in Tennessee and the nation
occurred in the racial and Ethnic origins of the population. For example,
growth rates for Hispanic and Asian populations for both the U.S. and
Tennessee have outpaced whites and African-Americans. Table 4
displays the recent trend in racial and ethnic composition from 1990
to 2000 for Hispanic/Non-Hispanic classifications.7
The most significant trend is the dramatic increase in the
Hispanic population, which nearly tripled in size. Asians represent the
second fastest growing single race in Tennessee with a 86.1 percent
increase between 1990 and 2000. The location of Japanese-owned
Table 4: Tennessee Population by Hispanic/Non-Hispanic Race,
1990 and 2000
Race/Ethnic Origin
2000
1990
Growth Rate
White/Non-Hispanic
79.2
82.6
11.9
African American/Non-Hispanic
16.3
15.9
19.8
Hispanic/All Races
2.2
0.7
278.2
Asian/Non-Hispanic
1.0
0.6
86.1
American Indian and Alaska Native/Non-Hispanic
0.2
0.2
42.7
Other/Non-Hispanic
0.1
0.0
277.9
Two or more races/Non-Hispanic
1.0
--
--
The most significant trend is
the dramatic increase in the
Hispanic population, which
nearly tripled in size.
Source: Calculations conducted using data from U.S. Census Bureau, American Fact Finder.
automotive suppliers and other Asian-owned businesses has been a
contributing force behind the increase in the Asian population.
Residents of different ethnic backgrounds potentially bring with them
different skill sets as well as different tastes and preferences for goods
and services. The increasing diversity in the population leads to
changes in the economy in terms of both production and consumption.
The economy is easily able to adjust and benefit from these changes.
The increase in diversity in the population may also result in the
need for more specialized public services, thus potentially putting
upward pressure on government spending. An example might include
the need for additional teachers trained in teaching English as a second
language. By making the investment in this specialized training, the
state can increase the quality of education for children from non-English
speaking households and can benefit from the resulting greater
productivity of these future labor force participants. Failure to make
current investments could lead to more significant demands for public
resources in the future and/or negative consequences for future
economic growth.
UNIVERSITY OF TENNESSEE
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CENTER FOR BUSINESS AND ECONOMIC RESEARCH
C
ONCLUSION
A growing and shifting
population requires
sufficient planning for
infrastructure and
educational needs.
The myriad changes in the general demographic landscape in
Tennessee between 1990 and 2000 have direct implications for all
aspects of the state’s economy. The effects will ripple through both
the supply and demand sides of the economy. As individuals,
Tennessee’s residents are producers or labor suppliers at work and
consumers or demander of goods and services at home. In addition,
their savings are part of the investment supply. All these activities are
influenced by the demographic characteristics of the population.
Changes in demographic characteristics of the population lead
to changes in economic behavior. More specifically, individual tastes
and preferences shift, due to the role that residents play as both
consumers and suppliers of labor. For example, the increase in the
middle-aged population in Tennessee can be expected to lead to an
increase in the demand for financial services and for retirement
planning. The demographic trends Tennessee has experienced in the
last decade are likely to continue, thus leading to the continuing
evolution of the state’s economy from a low-skill manufacturing-based
economy to a more high-tech manufacturing and service-oriented
economy.
In addition to shifting demands in the private sector, changing
demographics also lead to shifts in the level and type of public services
demanded. The allocation of public resources must be prioritized
based on the changing needs and goals of the state’s population.
Demographic considerations should influence budgetary matters. For
example, a growing and shifting population requires sufficient planning
for infrastructure and educational needs. Understanding recent
demographic trends and their effects on the state’s economy and public
sector is a key factor in understanding the investments necessary to
ensure the continuing prosperity of the state of Tennessee.
UNIVERSITY OF TENNESSEE
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CENTER FOR BUSINESS AND ECONOMIC RESEARCH
ENDNOTES
U.S. Department of Commerce, Bureau of the Census, 2000 Census.
Feedback effects are measured in terms of increased output, income and
employment arising from the increased spending of an expanding population. As
resident spending ripples through the state’s economy, output and income increase,
thus supporting a higher level of employment.
3
See Kelley, A.C. and R.M. Schmidt, 1994. “Population and Income Changes:
Recent Evidence.” World Bank Discussion Paper 249. Washington DC: World
Bank, for a review of empirical findings.
4
See Kelley, A.C., 1976. “Demographic Change and the Size of the Government
Sector,” Southern Economic Journal, October: 1056-1066.
5
See Bun, Song Lee and Shuanglin Lin, 1194. “Government Size, Demographic
Changes and Economic Growth,” International Economic Journal, 8 (1): 91-106.
6
See Kelley, A.C. and R.M. Schmidt, 1994. “Population and Income Changes:
Recent Evidence.” World Bank Discussion Paper 249. Washington DC: World
Bank.
7
Table 4 shows the difference between population by race in 1990 and the population
by race in 2000. Because individuals could report only one race in 1990 and could
report more than one race in 2000, the race data between 1990 and 2000 are not
directly comparable. Thus, some reported differences in the race are due to changes
in the Census questionnaire. However, 98.9 percent of Tennessee's respondents
chose only one race, thus limiting the magnitude of potential discrepancies between
reported growth rates and actual growth rates.
1
2
For additional Tennessee economic data and publications,
please visit our Internet site at
http://cber.bus.utk.edu
UNIVERSITY OF TENNESSEE
13
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Topics in upcoming issues...
Changes in the labor market and in Tennesseans'
economic status -Shifts in the social fabric -Differences in housing characteristics
Center for Business and Economic Research
College of Business Administration
The University of Tennessee
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Knoxville, Tennessee 37996
http://cber.bus.utk.edu
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