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Fertility choice and semi-endogenous growth: where Becker meets Jones

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GROWIEC, Jakub

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Abstract

Introducing fertility choice into an R&D-based semi-endogenous growth model makes it possible for the economy's long-run growth rate to be again fully endogenously determined. A positive growth rate along the balanced growth path requires a certain knife-edge assumption, though. In the usual framework, it would be the assumption that the intertemporal elasticity of substitution in consumption be exactly unity (IES=1). We argue that such an assumption constitutes the ultimate source of long-run growth in these models; thus, we analyze the alternatives. If one relaxes the IES=1 assumption, and introduces a minimum ÒsubsistenceÓ fertility level to the model, there may (but may not) emerge an asymptotic balanced growth path with positive growth rates, to which the economy eventually converges as levels of variables diverge to inÞnity. This balanced growth path is either saddle-path stable or completely stable. We also address the issue of the economy's invariance towards fertility-promoting policy within the semi-endogenous growth framework. We conclude that such policy can bring long-run effects only in the knife- edge case of IES=1 type. Jones' policy invariance result is typically consistent with endogenous fertility.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006023.

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Date of creation: 01 Mar 2006
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Handle: RePEc:cor:louvco:2006023

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Related research
Keywords: fertility choice; semi-endogenous growth; R&D; long-run dynamics; knife-edge conditions.;

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Find related papers by JEL classification:
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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  1. Beaudry, Paul & van Wincoop, Eric, 1996. "The Intertemporal Elasticity of Substitution: An Exploration Using a US Panel of State Data," Economica, London School of Economics and Political Science, vol. 63(251), pages 495-512, August. [Downloadable!] (restricted)
  2. Holger Strulik, 2001. "The Role of Human Capital and Population Growth in R&D-Based Models of Economic Growth," Quantitative Macroeconomics Working Papers 20109, Hamburg University, Department of Economics. [Downloadable!]
    Other versions:
  3. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February. [Downloadable!] (restricted)
  4. Barro, Robert J & Becker, Gary S, 1989. "Fertility Choice in a Model of Economic Growth," Econometrica, Econometric Society, vol. 57(2), pages 481-501, March. [Downloadable!] (restricted)
    Other versions:
  5. Favero, Carlo A, 2005. "Consumption, Wealth, the Elasticity of Intertemporal Substitution and Long-Run Stock Market Returns," CEPR Discussion Papers 5110, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. repec:bep:macadv:v:1:y:2001:i:advances/1/2:p:1028-1028 is not listed on IDEAS
  7. Taiji Harashima, 2005. "An Estimate of the Elasticity of Intertemporal Substitution in a Production Economy," Macroeconomics 0508030, EconWPA. [Downloadable!]
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  1. repec:bep:mactop:v:6:y:2006:i:2:p:1407-1407 is not listed on IDEAS
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