Economic progress brings with it two key patterns. Firstly, we observe the progressive change in the demographic structure of the population. Secondly, as nations advance economically, the portion of food in total expenditures tends to decrease. Using household-level consumption data from 20 countries, this work document that as the age of household members increases, the proportion of total household expenditures dedicated to food also increases. This finding suggests that an ageing population will result in a higher overall food share of total expenditures. I test this hypothesis by constructing a quantitative, demand side model and document that the demographic evolution slows down the shift away from food consumption in almost every country in the sample. The correlation between income and the demographic transition implies that not accounting for demography leads to an underestimation of the income effect by up to 20%.
STEG Working Paper Series
• Research Theme 2: Labour, Home Production, and Structural Transformation at the Level of the Household
Demographic Trends and Engel’s Law across the Development Spectrum
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