Malthusian stagnation is efficient

Juan Cordoba and Xiying Liu ()
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Xiying Liu: Department of Math Economics and Math Finance, Wuhan University

Theoretical Economics, 2022, vol. 17, issue 1

Abstract: This article studies socially optimal allocations, from the point of view of a benevolent social planner, in environments characterized by fixed resources, endogenous fertility, and full information. Individuals in our environment are fully rational and altruistic toward their descendants. Our model allows for rich heterogeneity of abilities, preferences for children, and costs of raising children. We show that the planner's optimal allocations are efficient in the sense of Golosov et al. (2007). We also show that efficient allocations in the endogenous fertility case differ significantly from its exogenous fertility counterpart. In particular, optimal steady-state population is proportional to the amount of fixed resources and the level of technology while steady-state individual consumption is independent of these variables, a sort of a "Malthusian stagnation" result. Furthermore, optimal allocations exhibit inequality, differential fertility, random consumption, and a higher population density of poorer individuals even when the planner is fully equalitarian, and faces no aggregate risk nor frictions.

Keywords: Efficiency; optimal population; endogenous fertility; stochastic abilities; inequality (search for similar items in EconPapers)
JEL-codes: D04 D10 D63 D64 D80 D91 E10 E60 I30 J13 N00 O11 O40 Q01 (search for similar items in EconPapers)
Date: 2022-01-20
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Malthusian Stagnation is Efficient (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:3542

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