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The determinants of income in a Malthusian equilibrium

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  • Sharp, Paul
  • Strulik, Holger
  • Weisdorf, Jacob

Abstract

This study constructs a simple, two-sector Malthusian model with agriculture and industry, and uses it to identify the determinants of income in a Malthusian equilibrium. We make standard assumptions about preferences and technologies, but in contrast to existing studies we assume that children and other consumption goods are gross substitutes. Consistent with the conventional Malthusian model, the present theory shows that productivity growth in agriculture has no effect on equilibrium income. More importantly, we also show that equilibrium income varies, not just with the death rate as has recently been demonstrated in the literature, but also with the level of productivity in the industrial sector. An empirical analysis using data for pre-industrial England lends support to both hypotheses.

Suggested Citation

  • Sharp, Paul & Strulik, Holger & Weisdorf, Jacob, 2012. "The determinants of income in a Malthusian equilibrium," Journal of Development Economics, Elsevier, vol. 97(1), pages 112-117.
  • Handle: RePEc:eee:deveco:v:97:y:2012:i:1:p:112-117
    DOI: 10.1016/j.jdeveco.2010.12.004
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    2. Quamrul Ashraf & Oded Galor, 2011. "Dynamics and Stagnation in the Malthusian Epoch," American Economic Review, American Economic Association, vol. 101(5), pages 2003-2041, August.
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    8. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World," Introductory Chapters, in: A Farewell to Alms: A Brief Economic History of the World, Princeton University Press.
    9. Allen, Robert C., 2001. "The Great Divergence in European Wages and Prices from the Middle Ages to the First World War," Explorations in Economic History, Elsevier, vol. 38(4), pages 411-447, October.
    10. Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679.
    11. Strulik, Holger, 2010. "A Note On Economic Growth With Subsistence Consumption," Macroeconomic Dynamics, Cambridge University Press, vol. 14(5), pages 763-771, November.
    12. Nicolini, Esteban A., 2007. "Was Malthus right? A VAR analysis of economic and demographic interactions in pre-industrial England," European Review of Economic History, Cambridge University Press, vol. 11(1), pages 99-121, April.
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    Cited by:

    1. Carl-Johan Dalgaard & Holger Strulik, 2015. "The physiological foundations of the wealth of nations," Journal of Economic Growth, Springer, vol. 20(1), pages 37-73, March.
    2. Rota, Mauro & Weisdorf, Jacob, 2019. "Expensive Labour and the Industrial Revolution: Evidence from Stable Employment in Rural Areas," CAGE Online Working Paper Series 442, Competitive Advantage in the Global Economy (CAGE).
    3. Bruno Lanz & Simon Dietz & Timothy Swanson, 2017. "Global Population Growth, Technology, And Malthusian Constraints: A Quantitative Growth Theoretic Perspective," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58, pages 973-1006, August.
    4. David de la Croix & Eric B. Schneider & Jacob Weisdorf, 2017. ""Decessit sine prole" Childlessness, Celibacy, and Survival of the Richest in Pre-Industrial England," LIDAM Discussion Papers IRES 2017001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Lanz, Bruno & Dietz, Simon & Swanson, Tim, 2018. "The Expansion of Modern Agriculture and Global Biodiversity Decline: An Integrated Assessment," Ecological Economics, Elsevier, vol. 144(C), pages 260-277.
    6. Bruno Lanz & Simon Dietz & Tim Swanson, 2016. "Economic growth and agricultural land conversion under uncertain productivity improvements in agriculture," FOODSECURE Working papers 53, LEI Wageningen UR.
    7. repec:got:cegedp:145 is not listed on IDEAS
    8. Bruno Lanz & Simon Dietz & Tim Swanson, 2018. "Global Economic Growth and Agricultural Land Conversion under Uncertain Productivity Improvements in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(2), pages 545-569.
    9. Holger Strulik, 2014. "Knowledge And Growth In The Very Long Run," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 459-482, May.
    10. Simon Dietz & Bruno Lanz, 2019. "Can a Growing World Be Fed When the Climate Is Changing?," CESifo Working Paper Series 7986, CESifo.
    11. Ken Tabata, 2013. "The Expansion of the Commercial Sector and the Child Quantity-Quality Transition in a Malthusian World," Discussion Paper Series 105, School of Economics, Kwansei Gakuin University, revised May 2013.
    12. Simon Dietz & Bruno Lanz, 2019. "Growth and adaptation to climate change in the long run," IRENE Working Papers 19-09, IRENE Institute of Economic Research.
    13. Fochesato, Mattia, 2018. "Origins of Europe’s north-south divide: Population changes, real wages and the ‘little divergence’ in early modern Europe," Explorations in Economic History, Elsevier, vol. 70(C), pages 91-131.
    14. Naso, Pedro & Lanz, Bruno & Swanson, Tim, 2020. "The return of Malthus? Resource constraints in an era of declining population growth," European Economic Review, Elsevier, vol. 128(C).

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    More about this item

    Keywords

    Malthusian model; Subsistence income;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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