Puerto Rico Economic Pulse ©

January 2012: The Economic Consequences of Less People

An analysis of the wrong direction of causality

Puerto Rico’s current economic situation, just like that of any country, reflects both temporary and long-term effects. Many of the long-term economic processes, in turn, are supported by what economists call “structural” variables. These are variables that determine the type of economic activity and the manner in which it takes place. During the last decade, Puerto Rico witnessed a significant change in one such variable—population—coupled with an unprecedented economic downturn. The Island lost significant income, wealth and people. In peacetime, and barring any major natural disaster, such events are far from the norm, although they are not unusual. This issue of the Pulse, the fifth installment of a series dedicated to analyze PR’s population shift, will examine the socioeconomic dynamics that took place during the last decade with particular emphasis on demographic data for all municipalities in Puerto Rico. The results will surprise you.