Question

Consider the Malthusian growth model. Assume that initially a country is in a situation of steady-state, that is, with population growth equal to zero. Describe in words and illustrate graphically the effect of a decrease in productivity on a country's population size and per capita income in the short run and in the long run

Answer 1

In Malthusian growth model, Malthus suggested positive, natural (natural disasters such as floods and earthquakes) and preventative checks to keep the population under control. Since, according to Malthus, population grows in geometric progression and food supply grows in arithmetic progression, there will be a shortage in food supply and due to population being higher and some people not having access to food will starve and die. Hence, by keeping preventative checks (family planning, late marriages, and celibacy), population will be under control.

Now, taking this case, when initially the country is in steady state. When there is a decrease in food productivity, the population size will automatically reduce due to shortage in food supply and per capita income will increase as a result of population reduction. In this Malthusian regime output per capita is stationary. Technology progresses only slowly, and is reflected in proportional increases in output and population. Because technological progress is slow, the return to human capital is low, and parents have little incentive to substitute child quality for quantity. The Malthusian pseudo steady state vanishes in the long run because of the impact of population size on the rate of technological progress.

There cannot be sustained growth in per capita output or consumption in this model. The only way a person’s output could be increased is by increasing the amount of land he uses. However, land is fixed and so it cannot be increased on a per person basis.

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This link might be helpful - http://faculty.las.illinois.edu/parente/Econ501/Part_II_Malthusian_Model.pdf