Optimal Pollution and Optimal Population

There is emerging evidence that environmental degradation increases human mortality. This paper provides a long-run consumer maximization model where population growth is endogenous to emissions that are generated in production. There is a trade-off between consumption and population growth; large consumption calls for large production, thus leading to high environmental mortality and low population growth. It may be optimal to end up with negative population growth implying that demographic sustainability fails as consumption increases excessively. We provide a theoretical model and suggest its calibrated version using European air pollution data. Our exercise illustrates the functioning of the theoretical model and discusses related methodological problems. Journal of Economic Literature: Q01, Q53, Q54, J1

Fertility, Mortality and Environmental Policy. IZA DP No. 10465

This article examines pollution and environmental mortality in an economy where fertility is endogenous and output is produced from labor and capital by two sectors, dirty and clean. An emission tax curbs dirty production, which decreases pollution-induced mortality but also shifts resources to the clean sector. If the dirty sector is more capital intensive, then this shift increases labor demand and wages. This, in turn, raises the opportunity cost of rearing a child, thereby decreasing fertility and the population size. Correspondingly, if the clean sector is more capital intensive, then the emission tax decreases the wage and increases fertility. Although the proportion of the dirty sector in production falls, the expansion of population boosts total pollution, aggravating mortality

Optimal Population Policy with Health Care and Lethal Pollution

Optimal population policy is examined in the following setup. Families invest in capital, spend on health care and determine their number of children. Firms produce output from labor, capital and pollutants. Pollution increases, but private and public health care decrease mortality dynamically, with lags. Our main findings are the following. A marginal increase in public health care improves welfare as long as it diminishes the mortality rate more than that in private health care. The government can decentralize the social optimum by a parental tax on newborns and a Pigouvian tax on pollutants. Private health care should not be taxed

Landowning, Status and Population Growth

This paper considers the effects of the landowning and land reforms on economic and demographic growth by a family-optimization model with endogenous fertility and status-seeking. A land reform provides the peasant with strong incentives to limit their family size and to improve the productivity of the land. Even though the income effect due to the land reform tends to raise fertility, a strong enough status-effect outweighs it, thus generating a decrease in population growth. The European demographic history provides supporting anecdotal evidence for this theoretical result

Non-homothetic multisector growth models

Multisector growth (MSG) models are dynamic versions of computable general equilibrium (CGE) models. Non-homothetic preference (utility) functions are required for the evolution of factor allocations and industrial structures in accordance with consumption expenditure patterns implied by the non-unitary income elasticities observed in all budget data since Engel in the 1850s. But comparative static general equilibrium solutions and particularly solving the dynamics of MSG models require explicit spcifications of all demand and cost (price) functions. On the demand side, the constant differences of elasticity of substitution (CDES) on-homothetic indirect utility functions and Roy's identity provide the explicit Marshallian demand functions and budget shares. Sectorial constant elasticity of substitution (CES) cost functions and Shephard's lemma provide the explicit relative commodity price functions and the sectorial cost shares and capital-labor ratios. Walrasian equilibria are given by one equation and the multisector dynamics by three differential equations. Benchmark solutions are given for three cost regimes of a 10-sector MSG model. History patterns of indstrial/allocational evolutions are recognized

Population growth overshooting and trade in developing countries

Population growth, International trade, O41, J13, J16,