Scandinavian Working Papers in Economics
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Institutet för Framtidsstudier - Institute for Futures Studies Arbetsrapport, Institutet för Framtidsstudier - Institute for Futures Studies

No 2001:1:
From Malthus to Modern Growth: Can Epidemics Explain the Three Regimes?

Nils-Petter Lagerlöf

Abstract: These are the stylized facts of long-run economic and demographic development, as described by Galor and Weil (AER 1999, 2000): Under an initial Malthusian Regime the growth rates of population and per-capita income are both low. Then follows a Post-Malthusian Regime, with higher growth rates of both population and per-capita income. Finally, the economy transits into a Modern Growth Regime, with falling population growth rates, but accelerated growth rates of per-capita inocme. This paper models the transition through all these three regimes endogenously. The model also captures the empirical regularity of a simultaneous fall in the level and the volatility of death rates, and the fact that death rates fell before birth rates. Throughout time, we let epidemic shocks hit the economy at a constant rate. However, with rising human capital the impact of these shocks is mitigated. For many generations the economy is stuck in a Malthusian Regime with volatile and high death rates. Sooner or later it experiences a phase of relatively mild epidemics. Mortality declines, enabling population and human capital to simultaneously start growing: a Post-Malthusian Regime. Once human capital growth has taken off, epidemic shocks have smaller impact. Finally comes a stage where parents start having fewer children, and instead invest more in their education: a quality-quantity switch. This triggers faster growth in human capital. The economy enters the Modern Growth Regime.

Keywords: Malthus; population; income; (follow links to similar papers)

JEL-Codes: J00; (follow links to similar papers)

41 pages, February 6, 2001

ISBN 91-89655-14-1

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