Advanced Search
MyIDEAS: Login to save this paper or follow this series

Declining Fertility and Economic Well-Being: Do Education and Health Ride to the Rescue?

Contents:

Author Info

  • Prettner, Klaus

    ()
    (University of Göttingen)

  • Bloom, David E.

    ()
    (Harvard University)

  • Strulik, Holger

    ()
    (Leibniz University of Hannover)

Abstract

It is widely argued that declining fertility slows the pace of economic growth in industrialized countries through its negative effect on labor supply. There are, however, theoretical arguments suggesting that the effect of falling fertility on effective labor supply can be offset by associated behavioral changes. We formalize these arguments by setting forth a dynamic consumer optimization model that incorporates endogenous fertility as well as endogenous education and health investments. The model shows that a fertility decline induces higher education and health investments that are able to compensate for declining fertility under certain circumstances. We assess the theoretical implications by investigating panel data for 118 countries over the period 1980 to 2005 and show that behavioral changes partly mitigate the negative impact of declining fertility on effective labor supply.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp6527.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6527.

as in new window
Length: 35 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6527

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: demographic change; effective labor supply; human capital; population health; economic growth;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. David N. Weil, 2007. "Accounting for The Effect of Health on Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 122(3), pages 1265-1306, 08.
  2. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2008. "Earnings Functions And Rates Of Return," Working Papers, Geary Institute, University College Dublin 200831, Geary Institute, University College Dublin.
  3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, Elsevier, vol. 22(1), pages 3-42, July.
  4. David E. Bloom & David Canning & Günther Fink, 2011. "Implications of Population Aging for Economic Growth," NBER Working Papers 16705, National Bureau of Economic Research, Inc.
  5. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 83-116, February.
  6. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2005. "The More the Merrier? The Effect of Family Size and Birth Order on Children's Education," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 120(2), pages 669-700, May.
  7. EECKHOUDT, Louis & PESTIEAU, Pierre, . "A note on longevity enhancing investment," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -2129, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. N. Gregory Mankiw & David N. Weil, 1988. "The Baby Boom, The Baby Bust, and the Housing Market," NBER Working Papers 2794, National Bureau of Economic Research, Inc.
  9. Kelley, Allen C. & Schmidt, Robert M., 1995. "Aggregate Population and Economic Growth Correlations: The Role of the Components of Demographic Change," Working Papers, Duke University, Department of Economics 95-37, Duke University, Department of Economics.
  10. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, Elsevier, vol. 22(9), pages 1325-1343, September.
  11. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 407-37, May.
  12. Bloom, David E. & Canning, David & Mansfield, Richard K. & Moore, Michael, 2007. "Demographic change, social security systems, and savings," Journal of Monetary Economics, Elsevier, Elsevier, vol. 54(1), pages 92-114, January.
  13. Carl-Johan Dalgaard & Holger Strulik, 2010. "Optimal Aging and Death: Understanding the Preston Curve," Discussion Papers 11-09, University of Copenhagen. Department of Economics, revised Mar 2011.
  14. Ben S. Bernanke & Refet S. Gurkaynak, 2001. "Is Growth Exogenous? Taking Mankiw, Romer and Weil Seriously," NBER Working Papers 8365, National Bureau of Economic Research, Inc.
  15. Quamrul H. Ashraf & Ashley Lester & David N. Weil, 2009. "When Does Improving Health Raise GDP?," NBER Chapters, in: NBER Macroeconomics Annual 2008, Volume 23, pages 157-204 National Bureau of Economic Research, Inc.
  16. Gauri Kartini Shastry & David N. Weil, 2003. "How Much of Cross-Country Income Variation is Explained By Health?," Journal of the European Economic Association, MIT Press, MIT Press, vol. 1(2-3), pages 387-396, 04/05.
  17. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
  18. Dierk Herzer & Holger Strulik & Sebastian Vollmer, 2012. "The long-run determinants of fertility: one century of demographic change 1900–1999," Journal of Economic Growth, Springer, Springer, vol. 17(4), pages 357-385, December.
  19. Axel BÖRSCH-SUPAN & Alexander LUDWIG, 2009. "Aging, Asset Markets, and Asset Returns: A View From Europe to Asia," Asian Economic Policy Review, Japan Center for Economic Research, Japan Center for Economic Research, vol. 4(1), pages 69-92.
  20. Henriette Engelhardt & Tomas Kögel & Alexia Prskawetz, 2001. "Fertility and women´s employment reconsidered: A macro-level time-series analysis for developed countries, 1960-2000," MPIDR Working Papers WP-2001-021, Max Planck Institute for Demographic Research, Rostock, Germany.
  21. Allen Kelley & Robert Schmidt, 1995. "Aggregate population and economic growth correlations: The role of the components of demographic change," Demography, Springer, Springer, vol. 32(4), pages 543-555, November.
  22. Rosenzweig, Mark R. & Zhang, Junsen, 2006. "Do Population Control Policies Induce More Human Capital Investment? Twins, Birthweight, and China's 'One Child' Policy," IZA Discussion Papers 2082, Institute for the Study of Labor (IZA).
  23. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  24. Mark Gertler, 1997. "Government Debt and Social Security in a Life-Cycle Economy," NBER Working Papers 6000, National Bureau of Economic Research, Inc.
  25. Ashenfelter, Orley & Harmon, Colm & Oosterbeek, Hessel, 1999. "A review of estimates of the schooling/earnings relationship, with tests for publication bias," Labour Economics, Elsevier, Elsevier, vol. 6(4), pages 453-470, November.
  26. Strulik, Holger & Prettner, Klaus & Prskawetz, Alexia, 2011. "R&D-based growth in the post-modern era," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 04/2011, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
  27. Klaus Prettner & Alexia Prskawetz, 2010. "Demographic Change in Models of Endogenous Economic Growth. A Survey," Working Papers, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna 1008, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  28. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, Elsevier, vol. 32(1), pages 1-13, January.
  29. David Bloom & David Canning & Günther Fink & Jocelyn Finlay, 2009. "Fertility, female labor force participation, and the demographic dividend," Journal of Economic Growth, Springer, Springer, vol. 14(2), pages 79-101, June.
  30. Joshua R. Goldstein & Michaela Kreyenfeld, 2011. "Has East Germany Overtaken West Germany? Recent Trends in Order‐Specific Fertility," Population and Development Review, The Population Council, Inc., The Population Council, Inc., vol. 37(3), pages 453-472, 09.
  31. John Cawley & James Heckman & Edward Vytlacil, 1998. "Understanding the Role of Cognitive Ability in Accounting for the Recent Rise in the Economic Return to Education," NBER Working Papers 6388, National Bureau of Economic Research, Inc.
  32. Flavio Cunha & James J. Heckman, 2009. "Human Capital Formation in Childhood and Adolescence," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 7(4), pages 22-28, 01.
  33. Carl-Johan Dalgaard & Holger Strulik, 2011. "A physiological foundation for the nutrition-based efficiency wage model," Oxford Economic Papers, Oxford University Press, vol. 63(2), pages 232-253, April.
  34. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(4), pages 759-84, August.
  35. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, Elsevier, vol. 104(C), pages 184-198.
  36. Laitner, John, 2007. "Comment on: David Bloom, David Canning, Rick Mansfield, and Michael Moore's "Demographic change, social security systems, and savings"," Journal of Monetary Economics, Elsevier, Elsevier, vol. 54(1), pages 115-117, January.
  37. Dalgaard, Carl-Johan & Kreiner, Claus Thustrup, 2001. " Is Declining Productivity Inevitable?," Journal of Economic Growth, Springer, Springer, vol. 6(3), pages 187-203, September.
  38. Joshua R. Goldstein & Tomás Sobotka & Aiva Jasilioniene, 2009. "The End of "Lowest-Low" Fertility?," Population and Development Review, The Population Council, Inc., The Population Council, Inc., vol. 35(4), pages 663-699.
  39. Avner Ahituv, 2001. "Be fruitful or multiply: On the interplay between fertility and economic development," Journal of Population Economics, Springer, Springer, vol. 14(1), pages 51-71.
  40. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(5), pages S71-102, October.
  41. Carl-Johan Dalgaard & Claus Thustrup Kreiner, . "Endogenous Growth: A Knife-Edge or the Razor's Edge?," EPRU Working Paper Series, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics 02-02, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Feb 2002.
  42. Strulik, Holger, 2002. "The Role of Human Capital and Population Growth in R&D-Based Models of Economic Growth," Royal Economic Society Annual Conference 2002, Royal Economic Society 170, Royal Economic Society.
  43. Mitsuhiro Fukao, 2009. "Comment on "Aging, Asset Markets, and Asset Returns: A View From Europe to Asia"," Asian Economic Policy Review, Japan Center for Economic Research, Japan Center for Economic Research, vol. 4(1), pages 95-96.
  44. Bloom, David E. & Canning, David & Fink, Günther, 2013. "Disease and Development Revisited," IZA Discussion Papers 7391, Institute for the Study of Labor (IZA).
  45. repec:fth:prinin:425 is not listed on IDEAS
  46. Gruber, Jonathan & Wise, David, 1998. "Social Security and Retirement: An International Comparison," American Economic Review, American Economic Association, American Economic Association, vol. 88(2), pages 158-63, May.
  47. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 90(5), pages 1160-1183, December.
  48. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers, University of Western Ontario, Department of Economics 8904, University of Western Ontario, Department of Economics.
  49. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  50. Brander, James A & Dowrick, Steve, 1994. "The Role of Fertility and Population in Economic Growth: Empirical Results from Aggregate Cross-National Data," Journal of Population Economics, Springer, Springer, vol. 7(1), pages 1-25.
  51. repec:bla:restud:v:76:y:2009:i:3:p:1149-1174 is not listed on IDEAS
  52. David E. Bloom & David Canning, 2004. "The Health and Wealth of Africa," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 5(2), pages 57-81, April.
  53. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, American Economic Association, vol. 88(5), pages 1290-1310, December.
  54. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, American Economic Association, vol. 90(4), pages 806-828, September.
  55. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  56. Takatoshi ITO, 2009. "Comment on "Aging, Asset Markets, and Asset Returns: A View From Europe to Asia"," Asian Economic Policy Review, Japan Center for Economic Research, Japan Center for Economic Research, vol. 4(1), pages 93-94.
  57. Joshua Angrist & Victor Lavy & Analia Schlosser, 2010. "Multiple Experiments for the Causal Link between the Quantity and Quality of Children," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 28(4), pages 773-824, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. repec:got:cegedp:139 is not listed on IDEAS
  2. Klaus Prettner, 2012. "Public education, technological change and economic prosperity: semi-endogenous growth revisited," PGDA Working Papers, Program on the Global Demography of Aging 9012, Program on the Global Demography of Aging.
  3. Bloom, David E. & Sousa-Poza, Alfonso, 2013. "Ageing and productivity," FZID Discussion Papers 63-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  4. Alfred Garloff & Rüdiger Wapler, 2013. "Are the Number of Skilled Workers Running Out in Germany? The (Non)-Consequences of Demographic Change," ERSA conference papers ersa13p854, European Regional Science Association.
  5. Klaus Prettner & Timo Trimborn, 2012. "Demographic Change and R&D-based Economic Growth: Reconciling Theory and Evidence," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c017_006, DEGIT, Dynamics, Economic Growth, and International Trade.
  6. Attar, M. Aykut, 2013. "Growth and Demography in Turkey: Economic History vs. Pro-Natalist Rhetoric," MPRA Paper 47275, University Library of Munich, Germany.
  7. Bloom, David E. & Sousa-Poza, Alfonso, 2013. "Ageing and Productivity: Introduction," IZA Discussion Papers 7205, Institute for the Study of Labor (IZA).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6527. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.