A growth model with population as an endogenous variable

Abstract This paper presents a recursive model of economic growth in which particular attention is paid to the demographic assumptions and their effects on the growth of income per head. The labour inputs depend both on the growth of the labour force and on the effectiveness of labour supplied, which in turn depends on the level of consumption per head, given the stock of capital and natural resources. Population growth is a function of two types of birth control programme; one is the subsidized supply of birth control instruments and the other is a bonus scheme which pays people not to have children. In examining the solution of the model, emphasis is placed on the sensitivity of the growth rate to variations in the allocation of the state's budget among various growth and non-growth inducing expenditures, including birth control. A numerical simulation, based on South Asian data, indicates the kind of calculation that can be made in this type offully recursive model.