The Determinants of Subsistence Income in
a Malthusian World
Abstract
This study constructs a simple, two-sector Malthusian model with agriculture and industry, and uses it to identify the determinants of subsistence income. We make standard assumptions about preferences and production technology, but in contrast to existing studies we assume that children and other consumption goods are gross substitutes. Consistent with the conventional Malthusian model, the present theory shows that productivity growth in agriculture has no effect on subsistence income. More importantly, we also show that subsistence income varies, not just with the death rate as has recently been demonstrated in the literature, but also with the level of productivity in the industrial sector. An empirical analysis using data for pre-industrial England lends support to both hypotheses.
