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

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Author Info

  • Zamac, Jovan

    ()
    (Institute for Future Studies)

  • Hallberg, Daniel

    ()
    (Institute for Future Studies)

  • Lindh, Thomas

    ()
    (Centre for Labour Market Policy Research (CAFO))

Abstract

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 calibrated to Swedish data and using the Swedish social policy setup. The model is provoked into a fertility trap by increasing 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 Centre for Labour Market Policy Research (CAFO), School of Business and Economics, Linnaeus University in its series CAFO Working Papers with number 2009:5.

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Length: 24 pages
Date of creation: 07 Dec 2008
Date of revision:
Handle: RePEc:hhs:vxcafo:2009_005

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Postal: Centre for Labour Market Policy Research (CAFO), School of Business and Economics, Linnaeus University, SE 351 95 Växjö, Sweden
Phone: +46 470 70 87 64
Web page: http://lnu.se/research-groups/cafo?l=en
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Keywords: Low fertility trap; Social norms relative income; Economic growth;

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References

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  1. Roberto Leombruni & Matteo Richiardi & Nicole J. Saam & Michele Sonnessa, 2005. "A Common Protocol for Agent-Based Social Simulation," LABORatorio R. Revelli Working Papers Series 47, LABORatorio R. Revelli, Centre for Employment Studies.
  2. Anders Björklund, 2006. "Does family policy affect fertility?," Journal of Population Economics, Springer, vol. 19(1), pages 3-24, February.
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Cited by:
  1. 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).
  2. Thomas Fent & Belinda Aparicio Diaz & Alexia Prskawetz, 2013. "Family policies in the context of low fertility and social structure," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 29(37), pages 963-998, November.

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