Malthusian Trap and Endogenous Population

Cahier Working Paper 97-01

27 Pages Posted: 10 Jun 1997

See all articles by Nguyen Manh Hung

Nguyen Manh Hung

Du Groupe de Recherche en Economie de l'Energie (GREEN) - de l'Environnement et des Ressources naturelles

Paul Makdissi

Université de Sherbrooke - Department of Economics

Date Written: February 1997

Abstract

In this paper, we develop a model in which human being constitutes the sole asset and is a production factor which can be combined with a fixed factor, say land, to produce a homogeneous commodity. Saving, so to speak, can only be made through having children, the number of which is an endogenous decision to the household. We show that the economy will run into the Malthusian equilibrium with high population and subsistent per capita consumption only when the initial population is large enough. Otherwise, the steady state equilibrium with lower population and higher per capita consumption than the Malthusian outcome will prevail. Also, we have identified the persistent Malthusian equilibrium--or Malthusian trap--and demonstrate that the economy can escape from this unappealing long-run situation either through a suitable technological shift or an appropriate subsidy of the child-rearing cost. Our results are then extended to the stochastic framework where the time rate of population change undergoes a process of Brownian motion. The probability distribution of the steady state is well determined, and saving via the number of offspring, as with the standard capital model, incorporates a precautionary component.

JEL Classification: E19, O15, O40

Suggested Citation

Hung, Nguyen Manh and Makdissi, Paul, Malthusian Trap and Endogenous Population (February 1997). Cahier Working Paper 97-01. Available at SSRN: https://ssrn.com/abstract=1739 or http://dx.doi.org/10.2139/ssrn.1739

Nguyen Manh Hung (Contact Author)

Du Groupe de Recherche en Economie de l'Energie (GREEN) - de l'Environnement et des Ressources naturelles ( email )

Ste-Foy, Quebec G1K 7P4
Canada

Paul Makdissi

Université de Sherbrooke - Department of Economics ( email )

2500, Boulevard of the University
Sherbrooke J1K 2R1, Quebec
Canada

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