Working Paper: NBER ID: w11590
Authors: Isaac Ehrlich; Jinyoung Kim
Abstract: The 19th century economist, Thomas Robert Malthus, hypothesized that the long-run supply of labor is completely elastic at a fixed wage-income level because population growth tends to outstrip real output growth. Dynamic equilibrium with constant income and population is achieved through equilibrating adjustments in "positive checks" (mortality, starvation) and "preventive checks" (marriage, fertility). Developing economies since the Industrial Revolution, and more recently especially Asian economies, have experienced steady income growth accompanied by sharply falling fertility and mortality rates. We develop a dynamic model of endogenous fertility, longevity, and human capital formation within a Malthusian framework that allows for diminishing returns to labor but also for the role of human capital as an engine of growth. Our model accounts for economic stagnation with high fertility and mortality and constant population and income, as predicted by Malthus, but also for takeoffs to a growth regime and a demographic transition toward low fertility and mortality rates, and a persistent growth in per-capita income.
Keywords: Malthusian framework; endogenous fertility; mortality; economic growth; human capital
JEL Codes: O1; J1; I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high fertility and mortality rates (J13) | stagnant population and income levels (R23) |
| economies transition from stagnation to growth (O49) | fertility and mortality rates decline (J11) |
| fertility and mortality rates decline (J11) | persistent growth in per capita income (O49) |
| discrete technological shocks (O33) | transition from Malthusian trap to growth regime (O41) |
| discrete technological shocks (O33) | affect both fertility and mortality rates (J13) |
| high fertility (J13) | lower per capita income (E25) |
| lower per capita income (E25) | checks population growth (J11) |