Rawlsian optimal population size

Abstract

In this paper, I examine the implications of the Rawlsian maximin criterion for optimal population size and intergenerational allocation of resource when fertility is endogenous. I show that whenever children are better-off than their parents in laissez-faire, then the size of the population and parental bequests are also optimal according to the Rawlsian criterion. Otherwise, laissez-faire leads to overpopulation and suboptimal bequests. I then show that by using proper price-based corrective policies, society can achieve a Rawlsian optimal allocation. These policies involve either a combination of a subsidy to aggregate future consumption and a per-capita tax on children, or a subsidy to average future consumption. © 1993 Springer-Verlag.