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Timing of childbirth, capital accumulation, and economic welfare

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  • Momota, Akira
  • Horii, Ryo

Abstract

This paper examines the effect of the timing of childbirth on capital accumulation and welfare in a simple overlapping generations model, where each agent lives for four periods and works for two periods. We show that delayed childbearing not only reduces population, but also generates fluctuations in the age composition of workers in the labor force. This causes the aggregate saving rate to fluctuate, which leads to cycles in the capital-labor ratio. When all agents delay childbearing, we analytically show that both the capital-labor ratio and the welfare of all agents can fall in the long run, despite the population decline. When a fraction of agents delay childbearing, it has differential welfare effects on agents depending on their positions in the demographic cycles. The effects of lower lifetime fertility and technological progress are also examined.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 34088.

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Date of creation: 13 Oct 2011
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Handle: RePEc:pra:mprapa:34088

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Keywords: Economic growth; Overlapping generations; Cycles; Population; Delayed childbearing;

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  1. d'Albis, Hippolyte, 2007. "Demographic structure and capital accumulation," Journal of Economic Theory, Elsevier, vol. 132(1), pages 411-434, January.
  2. Zeng, J & Jie Zhang, . "Optimal social security in a dynastic model with investment externalities and endogenous fertility," MRG Discussion Paper Series 1006, School of Economics, University of Queensland, Australia.
  3. Mark Berger, 1989. "Demographic Cycles, Cohort Size, and Earnings," Demography, Springer, vol. 26(2), pages 311-321, May.
  4. Tomás Sobotka, 2004. "Is Lowest-Low Fertility in Europe Explained by the Postponement of Childbearing?," Population and Development Review, The Population Council, Inc., vol. 30(2), pages 195-220.
  5. Kalemli-Ozcan, Sebnem, 2003. "A stochastic model of mortality, fertility, and human capital investment," Journal of Development Economics, Elsevier, vol. 70(1), pages 103-118, February.
  6. Matthias Doepke, 2002. "Child Mortality and Fertility Decline: Does the Barro-Becker Model Fit the Facts?," UCLA Economics Working Papers 824, UCLA Department of Economics.
  7. Cigno, Alessandro & Ermisch, John, 1989. "A microeconomic analysis of the timing of births," European Economic Review, Elsevier, vol. 33(4), pages 737-760, April.
  8. Hippolyte d'Albis & Emmanuelle Augeraud-Véron & Katheline Schubert, 2010. "Demo-economic equilibria when childbearing age is endogenous," LERNA Working Papers 10.04.310, LERNA, University of Toulouse.
  9. Hans-Peter Kohler & Francesco C. Billari & José Antonio Ortega, 2002. "The Emergence of Lowest-Low Fertility in Europe During the 1990s," Population and Development Review, The Population Council, Inc., vol. 28(4), pages 641-680.
  10. Charles H. Mullin & Ping Wang, 2002. "The Timing of Childbearing among Heterogeneous Women in Dynamic General Equilibrium," NBER Working Papers 9231, National Bureau of Economic Research, Inc.
  11. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
  12. Yew, Siew Ling & Zhang, Jie, 2009. "Optimal social security in a dynastic model with human capital externalities, fertility and endogenous growth," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 605-619, April.
  13. Robert Tamura, 2002. "Human capital and economic development," Working Paper 2002-5, Federal Reserve Bank of Atlanta.
  14. Kasey Buckles, 2008. "Understanding the Returns to Delayed Childbearing for Working Women," American Economic Review, American Economic Association, vol. 98(2), pages 403-07, May.
  15. Tullio Jappelli & Franco Modigliani, 1998. "The Age-Saving Profile and the Life-Cycle Hypothesis," CSEF Working Papers 09, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  16. Sebnem Kalemli-Ozcan, 2002. "Does the Mortality Decline Promote Economic Growth?," Macroeconomics 0212008, EconWPA.
  17. Iyigun, Murat F., 2000. "Timing of childbearing and economic growth," Journal of Development Economics, Elsevier, vol. 61(1), pages 255-269, February.
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