Demographic Shocks and the Factor Proportions Model: From the Plague of Justinian to the Black Death

Abstract

This chapter develops a factor proportions-based model of the Plague of Justinian in the sixth century which rests on a Malthusian specification of birth and death rates in combination with an endogenous land frontier, whose extension is subject to increasing marginal costs. When the population shrinks, wages increase and land rents decline. The amount of new land cleared is reduced and so is the area under cultivation. Per capita output and consumption rise and trigger new population growth. Eventually the price of land rises and the real wage declines. New land is added and the economy returns to the steady state. It is also demonstrated that technological change will increase both the population and the area under cultivation. The model is used to shed some light on the difference in performance between three geographical regions affected by the plague: the Byzantine Empire, where the plague struck directly and the economy had barely recovered centuries later; the Islamic world, which fared far better and even experienced a ‘green revolution’ based on crops introduced from the east; and Western Europe, which eventually expanded most rapidly of all on the basis of land clearance and agricultural innovations.