The Solow Model With Logistic Manpower: A Stability Analysis
Journal of World Economics Review, Vol. 3, No. 2, pp. 161-166, 2008
7 Pages Posted: 24 Aug 2005 Last revised: 5 Jun 2011
Date Written: August 1, 2005
In standard economic growth theory it is assumed that labour force follows exponential growth, a not realistic assumption. As described in, for example, Maynard Smith, Ref. 1, the growth of natural populations is more accurately depicted by a logistic growth law. This paper analyzes how neoclassic Solow-Swan model, see Ref. 2 and Ref. 3, is affected by logistic growth of population, comparing it with classic malthusian model. We show that with the logistic law, the intrinsic rate of population growth plays no role in determining long run equilibrium per worker level of capital. In addition, we tackle the stability of the model setting off its long run equilibrium against the steady state of the traditional one.
Keywords: Solow-Swan model, logistic growth law
JEL Classification: C62, O41
Suggested Citation: Suggested Citation