ACCIDENTAL AND SYSTEMATIC CHANGE IN POPULATION HISTORY - HOMEOSTASIS IN A STOCHASTIC SETTING

New insights emerge when we analyze Malthusian systems in a stochastic environment which makes both productivity and reproduction random variables. Then the equilibrating system determines probability distributions for population and wages. Within these distributions, the positions of population size and wages are determined at any historical moment mainly by more recent shocks, as homeostasis slowly overcomes the influence of older ones, which have a half-life of about 70 years. Stronger homeostasis may increase or diminish the variance of population size, but it reduces the variance of wages, by leading population size to track more closely changes in the demand for labor. The interrelation of population and wages, and the absence of exogenous variables, makes estimation and testing treacherous, leading to mistaken inferences in the literature. Long waves in European demographic history do not arise from homeostasis and may simply reflect the demographic cumulation of random shocks, rather than a cyclic driving force. © 1993 Academic Press. All rights reserved.