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Income Inquality, Fertility Choice, and Economic Growth: Theory and Evidence

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  • Khoo, L.
  • Dennis, B.

Abstract

The growing literature on inequality and economic growth has focused on the adverse effects of income inequality on investment. We focus on the negative relationship between inequality and economic growth, hypothesising that inequality lowers economic growth by raising the fertility rate. Unlike other studies, our analysis does not rely on incomplete markets, or on parental altruism. Instead, it uses the fact that a larger number of children reduces the riskiness of the financial payoff from having children, a factor which is more important for the poor than for the wealthy. Cross country econometric tests using a newly collated dataset of income distribution support the proposition that much of the growth enhancing effects of an equitable income distribution may come from its negative effect on fertility rates.

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Bibliographic Info

Paper provided by Harvard - Institute for International Development in its series Papers with number 687.

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Length: 18 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:harvid:687

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Keywords: FERTILITY ; INCOME ; ECONOMIC GROWTH;

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Cited by:
  1. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.
  2. Christophe Ehrhart, 2009. "The effects of inequality on growth: a survey of the theoretical and empirical literature," Working Papers 107, ECINEQ, Society for the Study of Economic Inequality.
  3. Michael Sarel, 1997. "How Macroeconomic Factors Affect Income Distribution," IMF Working Papers 97/152, International Monetary Fund.
  4. Bicak, H.A. & Jenkins, G.P., 1999. "Costs and Pricing Policies Related to Transporting Water by Tanker from Turkey to North Cyprus," Papers 689, Harvard - Institute for International Development.

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