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Water-Price Differential and the Efficient Population Size and Urban-Rural Composition of a Distant, Large, Arid Island

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Abstract

A low population density and a large distance from civilization centres present a high degree of isolation to the island's residents. Immigration can reduce the mental and material costs of isolation for the veteran residents, but at the expense of cultural and national cohesion and social harmony; and, in the case of an arid land, also at the expense of the amount and price of water allocated to agriculture. An expected-net-benefit-maximisation model for determining population size and its equilibrium urban-rural composition is developed. It is simulated for various agricultural water prices. The simulation results illustrate the central role of the effect of immigration on the urban unemployment rate in the determination of the island's efficient population size.

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File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/doc/uow012178.pdf
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Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp04-17.

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Length: 20 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:uow:depec1:wp04-17

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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
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Keywords: Population density; efficient population size; simulation;

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  1. Harry Clarke, 2003. "Should Australia Target Its Population Size?," Economic Papers, The Economic Society of Australia, vol. 22(1), pages 24-35, 03.
  2. Theodore W. Schultz, 1962. "Reflections on Investment in Man," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1.
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