Analysing the Link between Population Diversity, Population Growth, and Income

Abstract Amidst shifting demographics across many countries, certain stylized facts related to fertility, population, and income have become less universally applicable. This research addresses a significant gap in literature by providing a comprehensive analysis on the relationship between population diversity, population growth, and income growth that incorporate both time-varying and cross-country components. Our study reveals a positive correlation between population diversity and population growth, suggesting that diversity along with migration contribute to population expansion due to strategic interactions among ethnic groups to compete for influences in society, hence fostering pronatalism policies. However, we found a negative association between population diversity and income growth, indicating potential ethnic conflict, rent-seeking behaviour, and other challenges that hinder policy implementation in highly diverse settings. Our findings underline the complex dynamics between these factors, emphasizing the need for further exploration.