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Low fertility and long run growth in an economy with a large public sector

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  • Zamac, Jovan

    ()
    (Institute for Futures Studies)

  • Hallberg, Daniel

    ()
    (Institute for Futures Studies)

  • Lindh, Thomas

    ()
    (Institute for Futures Studies)

Abstract

There is plenty of evidence that growth has a negative relation to fertility and dependency ratios. Recently it has been suggested that low fertility countries may be caught in a trap that is hard to get out of. One important mechanism in such a trap would be social interaction and its effect on the ideal family size. Such social interaction mechanisms are hard to capture in formal models, therefore we use an agent based simulation model to investigate the issue. In our experimental setup a stable growth and population path is provoked into a fertility trap by rising relative child costs linked to positive growth. Even rather large increases in child benefits are then insufficient to get out of the trap. However, the small number of children temporarily enables the economy to grow faster for several decades. Removing the adaptation of social norms turns out to disarm the trap.

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Bibliographic Info

Paper provided by Institute for Futures Studies in its series Arbetsrapport with number 2008:11.

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Length: 35 pages
Date of creation: Oct 2008
Date of revision:
Publication status: Published as Zamac, Jovan, Daniel Hallberg and Thomas Lindh, 'Low fertility and long run growth in an economy with a large public sector' in European Journal of Population, 2010, pages 183-205.
Handle: RePEc:hhs:ifswps:2008_011

Note: ISSN: 1652-120X; ISBN: 978-91-85619-35-1
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Postal: Institute for Futures Studies, Box 591, SE-101 31 Stockholm, Sweden
Phone: 08-402 12 00
Fax: 08-24 50 14
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Web page: http://www.framtidsstudier.se
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Keywords: low fertility trap; social norms relative income; economic growth;

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Cited by:
  1. Thomas Fent & Belinda Aparicio Diaz & Alexia Prskawetz, 2010. "Family Policies in the Context of Low Fertility and Social Structure," Working Papers 1102, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  2. Bloom, David E. & Sousa-Poza, Alfonso, 2010. "Economic consequences of low fertility in Europe," FZID Discussion Papers 11-2010, University of Hohenheim, Center for Research on Innovation and Services (FZID).

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