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Federalism, Fertility, and Growth

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  • Rainald Borck

Abstract

This paper analyses the effect of federalism on fertility and growth. In a model with human capital accumulation and endogenous fertility, two regimes of education finance are compared: central and local education. Using numerical simulation, I find that local education finance yields higher growth at the price of increased inequality. Aggregate fertility may be lower or higher under federalism. Interestingly, the fertility differential is reversed: while under central finance, rich families have fewer children than poor ones (when the elasticity of substitution between children and consumption is large), the opposite may occur under local finance. The paper also tests the relationship between fertility rates and fiscal decentralisation empirically on a panel of OECD countries and finds a weak negative effect of decentralisation on total and differential (poor minus rich) fertility.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 113 (2011)
Issue (Month): 1 (03)
Pages: 30-54

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Handle: RePEc:bla:scandj:v:113:y:2011:i:1:p:30-54

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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References

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  1. Jan K. Brueckner, 2005. "Fiscal Federalism and Economic Growth," Working Papers 050612, University of California-Irvine, Department of Economics.
  2. Matthias Doepke, . "To Segregate or to Integrate: Education Politics and Democracy," UCLA Economics Online Papers 411, UCLA Department of Economics.
  3. Ulrich Thießen, 2003. "Fiscal Decentralisation and Economic Growth in High-Income OECD Countries," Fiscal Studies, Institute for Fiscal Studies, vol. 24(3), pages 237-274, September.
  4. Danyang Xie & Heng-fu Zou & Hamid Davoodi, 1999. "Fiscal Decentralization and Economic Growth in the United States," CEMA Working Papers 109, China Economics and Management Academy, Central University of Finance and Economics.
  5. Tao Zhang & Heng-fu Zou, 2001. "Fiscal decentralization, public spending, and economic growth in China," CEMA Working Papers 58, China Economics and Management Academy, Central University of Finance and Economics.
  6. DE LA CROIX, David & DOEPKE, Matthias, . "Public versus private education when differential fertility matters," CORE Discussion Papers RP -1727, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. de la Croix, David & Monfort, Philippe, 1999. "Education Funding and Regional Convergence," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  8. Robert Tamura, 2001. "Teachers, Growth, and Convergence," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1021-1059, October.
  9. Anna Cristina D’Addio & Marco Mira d’Ercole, 2005. "Policies, Institutions and Fertility Rates: A Panel Data Analysis for OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2005(2), pages 7-45.
  10. Stansel, Dean, 2005. "Local decentralization and local economic growth: A cross-sectional examination of US metropolitan areas," Journal of Urban Economics, Elsevier, vol. 57(1), pages 55-72, January.
  11. Lalive, Rafael & Zweimüller, Josef, 2005. "Does Parental Leave Affect Fertility and Return-to-Work? Evidence from a "True Natural Experiment"," IZA Discussion Papers 1613, Institute for the Study of Labor (IZA).
  12. Iimi, Atsushi, 2005. "Decentralization and economic growth revisited: an empirical note," Journal of Urban Economics, Elsevier, vol. 57(3), pages 449-461, May.
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Cited by:
  1. Eiji Yamamura, 2011. "Corruption and Fertility: Evidence from OECD countries," EERI Research Paper Series EERI_RP_2011_03, Economics and Econometrics Research Institute (EERI), Brussels.

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