Agricultural Growth and Population Change

Abstract

The macroeconomic theory of the relationship between demographic and agricultural change was developed by Malthus and Ricardo in the early stage of demographic transition in Europe, and interest in classical theory was revived in the middle of this century, when economists became aware of the unfolding demographic transition in other parts of the world. Ricardo (1817) distinguished between two types of agricultural expansion in response to population growth. One is the extensive margin, the expansion into new land which he supposed would yield diminishing returns to labour and capital because the new land was presumed to be more distant or of poorer quality than the land already in use. The other type, the intensive margin, is more intensive cultivation of the existing fields, raising crop yields by such means as better fertilization, weeding, draining, and other land preparation. This also was likely to yield diminishing returns to labour and capital. Therefore Ricardo assumed, with Malthus (1803), that population increase would sooner or later be arrested by a decline in real wages, increase of rents, and decline of per capita food consumption.