Population Growth and Natural Resources: Economic Theories

Pages: 19 (7505 words) Published: November 5, 2014
Population Growth and Natural Resources 73

3.2 Economic Theories of Population Growth
In this section the demographic transition process observed in the previous section will be examined in terms of economic theories.

3.2.1 The Malthus model
Thomas Robert Malthus …1766±1834† is known as a pioneer in the economic theory of population. His Principle of Population …[1798] 1926† was a re¯ection of England's premiere entrance into the process of modern demographic transition. His population theory may be summarized as follows: as with other animals, human beings have a natural instinct to bear children to a physical maximum; under this `®xity of passion' people tend to multiply in an exponential rate; where the production of food is constrained by the ®xed endowment of natural resources, especially land, and can increase only arithmetically, whatever slack of food supply per capita beyond a subsistence level may exist will eventually be used up by increased population; further increases in population are bound to be checked by famines, pests, and wars of desperate competition for limited food supply; thus, it is not possible that the levels of living and income per capita for the majority of people can remain beyond a subsistence minimum in the long run.

This theory may be expressed by line GG in Figure 3.3, which represents a relationship between the wage rate …W † or an average income per labourer and the growth rate of population …N_ =N † where N and N_ denote respectively, population and its absolute increase. Line GG cuts through the horizontal axis  . The wage rate measured by the distance between O and W

 is de®ned as the
at W
subsistence wage rate that is barely suf®cient for a labourer and his family to subsist, and, hence, keeps average family size and total population constant. Line GG is upward-sloping to indicate a relationship by which any increase  …due to an increase in labour demand or a decrease

in the wage rate beyond W
in labour supply† results in a positive rate of population growth. The exponential growth in the labour force that is implied from the positive population growth rate will eventually close any excess labour demand and thereby drive .

the wage rate back to W
On the other hand, as continued growth in population and the labour force creates excess labour supply, the wage rate is pushed down below the subsistence level so that the population would decrease via the Malthusian check to recover the labour demand±supply equilibrium at the subsistence wage

74

Population Growth and Natural Resources


Population growth rate

(N/N )

G

H
0
G

FIG. 3.3

(W)

W
Wage rate

The Malthusian population theory and its revision

rate. Thus, in the Malthus model the sustained divergence of the wage rate  never occurs.
from W
While Malthus is known as a heretic in the English Classical School, his population model has been accepted, widely, even by opponents such as David Ricardo. However, Malthus's prediction has not stood the test of subsequent history. Indeed, according to the commonly observed pattern of demographic transition, both the birth-rate and the natural rate of population growth decrease in Phase 3, which corresponds to the period characterized by sustained increase in the real wage rate. This association of population growth deceleration with sustained increases in the wage rate indicates that the relationship between N_ =N and W is not linearly rising as represented by line GG, but turns to be downward-sloping towards H after a certain threshold is reached, as indicated by the dotted line in Figure 3.3.

3.2.2

The household utility maximization model*

Even though the Malthus model did not stand the empirical test for the later stage of development, it was relevant to English economy in the 1770s and 1780s when the theory was developed. During this period employment opportunities expanded with the beginning of the Industrial Revolution *...
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