The Impact of Population Growth on Economic Growth with the Assumption of Simultaneous Endogeneity of Population and Technology

Document Type : Research Article

Author

Assistant Professor, Department of Energy Engineering, University of Larestan, Larestan, Iran.

Abstract

Demographic discussions as well as studies in the field of economic growth are among the oldest economic topics. Despite a wide range of theoretical and empirical research, economists and demographers have not yet reached a single point of view on the relationship between economic growth and population. Countries with rapidly growing populations tend to have low economic growth rates. This negative relationship is usually not shown in different studies. What social welfare theory can argue that the population of Iran is under or overhead of optimal value? In literature, most studies focus specifically on exogenous population changes. Endogenous population changes in an endogenous growth model have been hypothesized only in restricted studies. The production function in the Ramsey model is generally a function of capital, labor and technology (knowledge level). In the developed model, the population is assumed to be endogenous in the Ramsey model. Also we assumed the technology level is a function of the population as a sigmoid function. So in this study, technology is endogenous. The dynamic problem is solved (Bellman function formed and optimal solution of this objective function was found) and optimal population growth rate is calculated in extended Ramsey growth model with simultaneous endogenous population growth rate and technology level. The optimal population growth rate for the Iranian economy is 2%. However, according to the Iran Statistics Center, the population growth rate was 1.1 percent in 2018. A lower population size than optimal can have negative effects on social welfare in the long run. Therefore, the government should implement appropriate population policies to achieve the optimal population growth rate of 2%.

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References

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Journal of Applied Economics Studies in Iran
Volume 12, Issue 48
January 2024
Pages 9-38

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