Economics and Business Administration

This paper offers a micro model of the relationship of the size of the population and the economy to productivity change. The constituents of the model are the number of potential technology producers, the number of elements available in the environment to stimulate invention, and the probabilistic relationships between inventors and stimuli. The model works out the tradeoff between the idea-stock-reducing and idea-stock- increasing forces, under different conditions of population growth. The model shows that under asstjmptions that seem economically and psychologically reasonable, a larger labor force has increasing returns in technology production. The number of possible new combinations that result from the addition of a new idea element to the pool of technical knowledge is very large relative to the depletion of the preexisting pool of technical knowledge by the discovery of that one idea. And the number of such possible new combinations that a representative additional person creates is very large relative to the additional possibilities of duplicated effort that result from the additional person. Hence the net result of an additional person is an increase in the total number of new ideas. And this effect will continue with increases in total persons and total technology until duplication approaches zero, and unduplicated idea production for the repre-sentative person approaches the person's total capacity for idea production. Hence there are increasing returns in idea-production to additional persons until convergence to constant returns