Population policy and individual choice

The general equilibrium implications of endogenous fertility for several social issues of population policy are examined. Laissez faire is found to lead to Pareto optimality within generations even in the presence of public goods and Malthusian diminishing returns. On the other hand, bequests emerge as a major potential source of Pareto inefficiency when parents care about the number and welfare of their offspring. Also considered are questions of intergenerational justice and equity using an intergenerational social welfare function. It is shown that maximizing the sum of utilities always leads to a larger population than maximizing per capita utility, but that the laissez-faire solution may lie outside the interval bounded by the two criteria.Invited Lecture at the First Annual Conference of the European Society for Population Economics, Rotterdam, 18–19 September 1987In preparing this paper, I have drawn heavily on joint work with Assaf Razin and Efraim Sadka, both of Tel-Aviv University, and on our book, Household and economy: Welfare economics of endogeneous fertility (Academic Press, New York 1987). I am indebted to two anonymous referees for helpful comments