Question

Consider the Malthusian model. Suppose the Influenza virus killed 10% of the people in an economy. Using a diagram, determine the long run (i.e., steady state) effects of this on the consumption per work, land per worker, and population. Graph the transition paths for consumption per worker and population from the old steady state to the new steady state.

Answer 1

The 1918 influenza epidemic struck India when the subcontinent was mired in its long-term Malthusian equilibrium of low population growth and stable per-capita consumption. Its terrible death toll left survivors with additional agricultural land, which we show they rapidly put to agricultural use with no decrease in yields. We explore the extent to which this increased per-capita wealth gave rise, over the ensuing decades, to heightened investments in both child quantity as well as child quality. Consistent with most Malthusian unified growth theories, we find that individuals in heavily affected districts had more children in the aftermath of the influenza. We also find that these children were taller and better educated. Our results suggest that the preference for child quality existed even in societies that appeared Malthusian both to contemporary observers and modern historians.The 1918 influenza epidemic provides a unique opportunity observe how an economy plausibly in a Malthusian population equilibrium react to an exogenous decrease in population
and hence increase in wealth per capita. India’s growth rate prior to 1921 had been low, 0.4% annually since 1891. Literacy rates were just 7.2%. Estimates of the influenza’s death toll range from 10.9 million (Hill 2011) to 22.5 million (Kingsley 1951) out of a 1911 population of just over 303 million. Contemporary sources report that health officials could do nothing to control the spread of the epidemic, and that it affected all classes of society.
In our first set of results, we investigate the spatial distribution of population in the crosssection just before the Influenza struck. In line with the predictions of a Malthusian model in long-run equilibrium, regions with favorable agro-ecological endowments (such as soil quality, groundwater availability, or terrain) have substantially higher output and populations but no higher output per capita (or proxies for human capital). We also find that agricultural wages are lower in high-productivity regions, consistent with a strong population response to agricultural income. In short, our cross-sectional findings imply that, in line with the views of contemporary observers, India on the eve of the Influenza was plausibly Malthusian environment.