The Political Economy and the Interaction between Endogenous Fertility and Inequality
AbstractWe simulate a two period olg-model with heterogeneous agents. Parents receive utility from quantity and quality of their offspring. Generating a trade-off between the former and the latter, an increasing wage rate leads to higher opportunity costs, lower fertility, and higher quality of the children. All this leads to an intergenerational persistence in fertility decisions and wages. We show that growth increases inequality and fertility differentials controlled for the initial distribution of wealth. Furthermore, we endogenize redistribution by implementing a median voter-system. Due to fertility differentials the median-voter moves from upper to lower income percentiles.
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Bibliographic InfoPaper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c009_041.
Length: 35 pages
Date of creation: Jun 2004
Date of revision:
OLG-model; endogenous fertility; intergenerational persistence; inequality;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- J1 - Labor and Demographic Economics - - Demographic Economics
- I2 - Health, Education, and Welfare - - Education
- O0 - Economic Development, Technological Change, and Growth - - General
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