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Optimal fertility along the life cycle

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  • Pierre Pestieau
  • Gregory Ponthiere

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Abstract

We explore the optimal fertility timing in a four-period OLG economy with physical capital, whose specificity is to include not one, but two reproduction periods. It is shown that, for a given total fertility rate, the economy exhibits quite different dynamics, depending on the timing of births. If all births take place in the late reproduction period, there exists no stable stationary equilibrium and the economy exhibits cyclical dynamics due to labor growth fluctuations. We characterize the long-run social optimum and show that optimal consumptions and capital depend on the optimal cohort growth factor, so that there is no one-to-one substitutability between early and late fertility. We also extend Samuelson’s Serendipity Theorem to our economy and study the robustness of our results to: (1) endogenizing fertility timing, (2) assuming rational anticipations about factor prices, (3) adding a third reproduction period. Copyright Springer-Verlag Berlin Heidelberg 2014

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 55 (2014)
Issue (Month): 1 (January)
Pages: 185-224

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Handle: RePEc:spr:joecth:v:55:y:2014:i:1:p:185-224

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Related research

Keywords: Childbearing ages; Early and late motherhoods; Fertility; Overlapping generations; Social optimum; E13; E21; J13;

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  18. PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "Optimal lifecycle fertility in a Barro-Becker economy," CORE Discussion Papers 2012010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Cited by:
  1. Pierre Pestieau & Grégory Ponthière, 2011. "Childbearing Age, Family Allowances and Social Security," PSE Working Papers hal-00612613, HAL.
  2. repec:hal:wpaper:halshs-00676500 is not listed on IDEAS
  3. Thomas Renstrom & Luca Spataro, 2014. "Population growth and human capital: a welfarist approach," Public Finance Research Papers 3, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome.
  4. Pierre Pestieau & Grégory Ponthière, 2012. "Optimal Lifecycle Fertility in a Barro Becker Economy," PSE Working Papers halshs-00676500, HAL.
  5. repec:hal:wpaper:hal-00612613 is not listed on IDEAS

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