A Model of Historical Evolution of Output and Population∗

All industrialized countries have experienced a transition from high birth rates and stagnant standards of living to low birth rates and sustained growth in per capita income. What factors contributed to this transition and to what extent? Were output and population dynamics driven by common or separate forces? We develop a general equilibrium model with endogenous fertility in order to quantitatively assess the impact of changes in young-age mortality and technological progress on the demographic transition and industrialization in England. We find that the decline in young-age mortality accounts for 60% of the fall in the General Fertility Rate that occurred in England between 1700 and 1950. Over the same period, changes in productivity account for 76% of the increase in GDP per capita and nearly all of the decline of land share in total income. Furthermore, we find that changes in productivity are quantitatively insignificant in accounting for the observed patterns in fertility behavior, while mortality changes are quantitatively relevant only to population dynamics, not to the other quantities predicted by the model. JEL classification: J10, O1, O4, E0 ∗Both authors are grateful to Larry Jones, Michele Boldrin, and V.V. Chari for their excellent advice. We also greatly benefited from suggestions by Matthias Doepke. †Department of Economics, University of Minnesota, Minneapolis, MN 55455; and Research Department, Federal Reserve Bank of Minneapolis, Minneapolis, MN 55480; E-mail: [email protected] ‡Department of Economics, University of Minnesota, Minneapolis, MN 55455; and Research Department, Federal Reserve Bank of Minneapolis, Minneapolis, MN 55480; E-mail: [email protected]