Income Inquality, Fertility Choice, and Economic Growth: Theory and Evidence
AbstractThe 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 InfoPaper provided by Harvard - Institute for International Development in its series Papers with number 687.
Length: 18 pages
Date of creation: 1999
Date of revision:
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Postal: CAER Project, Harvard Institute for International Development, 14 Story Street, Cambridge MA 02138O
Web page: http://www.hiid.harvard.edu/
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Find related papers by JEL classification:
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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- Michael Sarel, 1997. "How Macroeconomic Factors Affect Income Distribution - The Cross-Country Evidence," IMF Working Papers 97/152, International Monetary Fund.
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