Population Under a Cap on Greenhouse Gas Emissions

37 Pages Posted: 14 May 2010

See all articles by Henning Bohn

Henning Bohn

University of California, Santa Barbara; CESifo (Center for Economic Studies and Ifo Institute)

Charles Stuart

University of California, Santa Barbara (UCSB) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: May 1, 2010

Abstract

A cap on greenhouse gas emissions makes total emissions a fixed common-property resource. Population increases under a cap are therefore self-limiting: a population increase raises labor and reduces emissions per unit of labor, which lowers incomes and fertility. Because a marginal birth under a cap lowers all incomes, a cap induces a negative population externality. The externality is substantial in calibrations, about 20 percent of income in steady state and 5 percent of income immediately after imposition, or more, per child. Similarly, the optimal population may be one-quarter of the natural population in steady state.

Keywords: Population Externality, Pigovian Tax, Emissions Cap, Endogenous Fertility, Economic Growth, Optimal Population, Calibrated Optimal Child Tax

JEL Classification: H21, H23, O40, Q56

Suggested Citation

Bohn, Henning and Stuart, Charles, Population Under a Cap on Greenhouse Gas Emissions (May 1, 2010). CESifo Working Paper Series No. 3046, Available at SSRN: https://ssrn.com/abstract=1605114 or http://dx.doi.org/10.2139/ssrn.1605114

Henning Bohn (Contact Author)

University of California, Santa Barbara ( email )

Department of Economics
Santa Barbara, CA 93106
United States
805-893-4532 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Charles Stuart

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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