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Endogenous Growth, Population Growth and the Repugnant Conclusion

Listed author(s):
  • Simone Marsiglio

    (University of Milan)

This paper studies the impact of endogenous population change on economic growth, analyzing the simplest optimal endogenous growth model, an AK type model, driven by human capital accumulation. We show that in steady state both demographic change and economic growth are constant, but the rate of these growth can be positive, negative or null accordingly to parameter values. Population dynamics is determined by the difference between the stationary fertility rate and the exogenous mortality rate: if this is positive population size indefinitely increases, otherwise it reaches a stationary level, which can be positive (if the difference is null) or null (if it is negative). If fertility is strictly lower than mortality, population size will constantly decrease in finite time and we end up with a complete collapse of the economy, characterized by the total extinction of the population. We also analyze the problem of optimal population size and its relationship with growth. The seminal work of Parfit (1984) suggests that total utilitarianism leads to increase population size indefinitely, even if it the average welfare tends to zero. We show that in our model economy, under certain parametric conditions, the repugnant conclusion holds; in particular, this happens when consumption growth is negative and the stationary fertility rate is higher than the exogenous mortality rate.

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Paper provided by Universitá degli Studi di Milano in its series UNIMI - Research Papers in Economics, Business, and Statistics with number unimi-1103.

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Date of creation: 12 Apr 2010
Handle: RePEc:bep:unimip:unimi-1103
Note: oai:cdlib1:unimi-1103
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  1. Casey B. Mulligan & Xavier Sala-i-Martin, 1993. "Transitional Dynamics in Two-Sector Models of Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 739-773.
  2. Gary S. Becker & Robert J. Barro, 1988. "A Reformulation of the Economic Theory of Fertility," The Quarterly Journal of Economics, Oxford University Press, vol. 103(1), pages 1-25.
  3. Ehrlich, Isaac & Lui, Francis, 1997. "The problem of population and growth: A review of the literature from Malthus to contemporary models of endogenous population and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 205-242, January.
  4. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
  5. Epstein, Larry G & Zin, Stanley E, 1991. "Substitution, Risk Aversion, and the Temporal Behavior of Consumption and Asset Returns: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 263-286, April.
  6. Barro, Robert J & Becker, Gary S, 1989. "Fertility Choice in a Model of Economic Growth," Econometrica, Econometric Society, vol. 57(2), pages 481-501, March.
  7. Kelley, Allen C. & Schmidt, Robert M., 1995. "Aggregate Population and Economic Growth Correlations: The Role of the Components of Demographic Change," Working Papers 95-37, Duke University, Department of Economics.
  8. Arrhenius, Gustaf, 2000. "An Impossibility Theorem for Welfarist Axiologies," Economics and Philosophy, Cambridge University Press, vol. 16(02), pages 247-266, October.
  9. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 279-288, Part II, .
  10. Bucci Alberto, 2010. "Population in Factor Accumulation-based Growth," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 33-68.
  11. Tamura, Robert, 1994. "Fertility, Human Capital and the Wealth of Families," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(4), pages 593-603, May.
  12. Allen Kelley & Robert Schmidt, 1995. "Aggregate population and economic growth correlations: The role of the components of demographic change," Demography, Springer;Population Association of America (PAA), vol. 32(4), pages 543-555, November.
  13. P. S. Dasgupta, 1969. "On the Concept of Optimum Population," Review of Economic Studies, Oxford University Press, vol. 36(3), pages 295-318.
  14. Kelley, Allen C, 1988. "Economic Consequences of Population Change in the Third World," Journal of Economic Literature, American Economic Association, vol. 26(4), pages 1685-1728, December.
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