In the Malthusian model, suppose that there is a medical innovation that reduces death rates. Using...
In the Malthusian model, suppose that there is a medical innovation that reduces death rates. Using diagrams, determine the effects of this in the long-run (in steady state) and briefly explain your results.
Homework Answers
Initially the real wage is W and the population level is P. When
innovation / technology rises from technology to technology 1, in
short run, wages rises to W1 from W, population would remain same
at P as it cannot rise in short time. E is the point when birth
rate = death rate. When wages rises from W to W1, Death rate is at
point A and Birth rate is at point B at this wage rate. As Birther
Rate > Death rate after technology have increased. In long run,
technology would remain the same while population would rise which
reduces the wage from W1 to W again and shifts from point P to Q.
When population rises, Birth rate reduces to point E from B and
Death rate rises from point A to E. In long run, economy is at its
same position in terms of wage / death rate / birth rate, only
population have risen. 
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