Fiscal Choices and Economic Outcomes
Chapter 8: Population Issues
All the models of government considered to this point assume that the population subject to the rule of a speciﬁc government is constant. But governments also implement measures to change the population subject to their rule – by changing the borders of the regime, by controlling the ﬂow of people across these borders, and by domestic policies that may aﬀect the level of the population. This chapter is a somewhat speculative account about how policies that aﬀect the level of the population are likely to diﬀer among the several major types of regimes. First, it is important to recognize that most regimes may have some incentive to increase the population subject to their rule, because population growth often increases both per capita income and tax revenues in those countries with extensive property rights. Over time and across countries, Adam Smith’s (1776) observation that the division of labor is limited by the extent of the market and Julian Simon’s recognition that people are The Ultimate Resource (1996) have proved to be more important insights about economic growth than the fear by Thomas R. Malthus that an increase in population relative to the ﬁxed amount of land would reduce productivity and per capita income. Controlling for other relevant conditions, per capita income and the diversity of goods and services generally increase with population density. Many governments, however, have been slow to recognize this eﬀect, and the policy positions of many interest groups continue to reﬂect Malthusian anxieties....
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