Population under a Cap on Greenhouse Gas Emissions

Henning Bohn and Charles Stuart

No 3046, CESifo Working Paper Series from CESifo

Abstract: A cap on greenhouse gas emissions makes total emissions a fixed common-property resource. Population increases under a cap are therefore self-limiting: a population increase raises labor and reduces emissions per unit of labor, which lowers incomes and fertility. Because a marginal birth under a cap lowers all incomes, a cap induces a negative population externality. The externality is substantial in calibrations, about 20 percent of income in steady state and 5 percent of income immediately after imposition, or more, per child. Similarly, the optimal population may be one-quarter of the natural population in steady state.

Keywords: population externality; Pigovian tax; emissions cap; endogenous fertility; economic growth; optimal population; calibrated optimal child tax (search for similar items in EconPapers)
JEL-codes: H21 H23 O40 Q56 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3046

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