Smith, Malthus and Recent Evidence in Global Population Dynamics

In conventional economic theories, population is determined outside of the economic system. However, classical political economists such as Adam Smith and Thomas Malthus have long argued for the endogenous determination of population, hence establishing a connection between economics and demography. Foley (2000) used empirically established global per capita output-fertility schedule based on the 1960-1992 Extended Penn World Tables to project the population stabilizing level of world per capita output and population. In this paper we intend to update this line of research using more recent empirical evidences. We find that the world production still exhibits strong pattern of Smithian increasing returns to scale, and most countries' population have been stabilizing along a convex path in the income-fertility schedule. Our projection suggests that the world population will stabilize at per capita income around $ 13,550 in 2005 PPP, and by the year of 2011, the world per capita output was still about $2,824 short. The world population will stabilize around 10 billion assuming the absence of any exogenous shocks to the empirically established global income-fertility relation.