In: Economics
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.
Please give me the analysis process and diagram, thanks
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.