Department of Economics

We calculate the harm a birth imposes on others when greenhouse gas emissions are a problem and a cap limits emissions damage. This negative population externality, which equals the corrective Pigovian tax on having a child, is substantial in calibrations. In our base case, the Pigovian tax is 21 percent of a parent's lifetime income in steady state and 5 percent of lifetime income immediately after imposition of a cap, per child. The optimal population in steady state, which maximizes utility taking account of the externality, is about one quarter of the population households would choose voluntarily