Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/38939 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3046
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
A cap on greenhouse gas emissions makes total emissions a fixed common-property resource. Population increases under a cap are therefore self-limiting: a population increase raises labor and reduces emissions per unit of labor, which lowers incomes and fertility. Because a marginal birth under a cap lowers all incomes, a cap induces a negative population externality. The externality is substantial in calibrations, about 20 percent of income in steady state and 5 percent of income immediately after imposition, or more, per child. Similarly, the optimal population may be one-quarter of the natural population in steady state.
Subjects: 
population externality
Pigovian tax
emissions cap
endogenous fertility
economic growth
optimal population
calibrated optimal child tax
JEL: 
H21
H23
O40
Q56
Document Type: 
Working Paper
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