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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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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2007/wp-cesifo-2007-12/cesifo1_wp2167.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2167.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_2167

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Keywords: fertility; education; decentralisation; growth;

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References

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  1. David DE LA CROIX & Matthias DOEPKE, 2002. "Public versus Private Education When Diferential Fertility Matters," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. David de la Croix & Matthias Doepke, 2007. "To Segregate or to Integrate: Education Politics and Democracy," Working Papers 60, ECINEQ, Society for the Study of Economic Inequality.
  3. 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).
  4. 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.
  5. Iimi, Atsushi, 2005. "Decentralization and economic growth revisited: an empirical note," Journal of Urban Economics, Elsevier, vol. 57(3), pages 449-461, May.
  6. Xie, Danyang & Zou, Heng-fu & Davoodi, Hamid, 1999. "Fiscal Decentralization and Economic Growth in the United States," Journal of Urban Economics, Elsevier, vol. 45(2), pages 228-239, March.
  7. Robert Tamura, 2001. "Teachers, Growth, and Convergence," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1021-1059, October.
  8. 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).
  9. 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.
  10. 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.
  11. 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.
  12. Brueckner, Jan K., 2006. "Fiscal federalism and economic growth," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2107-2120, November.
  13. De la Croix, David, 2000. "Education Funding and Regional Convergence," Open Access publications from Université catholique de Louvain info:hdl:2078.1/75728, Université catholique de Louvain.
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Cited by:
  1. Eiji Yamamura, 2011. "Corruption and Fertility: Evidence from OECD countries," Journal of Economics and Econometrics, Economics and Econometrics Research Institute (EERI), Brussels, vol. 54(2), pages 34-57.

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