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Endogenous Growth with Endogenous Fertility and Social Discrimination in Education

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  • Schäfer, Andreas
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    Abstract

    We simulate a two-sectoral, three-period OLG-model with endogenous fertility and endogenous education. Parents receive utility from quantity and quality (education) of their offspring, generating a trade-off between the former and the latter. Since education governs efficiency in production, hence wage income and growth, labour supply and education per child increase and fertility declines dur- ing the process of economic development. Therefore, the model is able to explain the recent fertility decline, in all developed countries, and to single out the determinants for long-run growth in per capita terms. The transition speed towards the steady state is governed by the growth rate of the wage rate, which in turn depends on education investments and fertility of previous generations, leading to an intergenerational persistence in these variables. Due to this effect, social discrimination in the education sector leads to high fertility and low education in the low-income percentiles, while the opposite is true for the upper ones. Hence, the average level of education declines and hinders growth. --

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    Bibliographic Info

    Paper provided by University of Rostock, Institute of Economics in its series Thuenen-Series of Applied Economic Theory with number 35.

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    Date of creation: 2002
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    Handle: RePEc:zbw:roswps:35

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    1. David de la Croix & Matthias Doepke, 2001. "Inequality and Growth: Why Differential Fertility Matters," UCLA Economics Working Papers 803, UCLA Department of Economics.
    2. Dahan, Momi & Tsiddon, Daniel, 1998. " Demographic Transition, Income Distribution, and Economic Growth," Journal of Economic Growth, Springer, vol. 3(1), pages 29-52, March.
    3. Becker, Gary S & Barro, Robert J, 1988. "A Reformulation of the Economic Theory of Fertility," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 1-25, February.
    4. Kremer, Michael, 1993. "Population Growth and Technological Change: One Million B.C. to 1990," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 681-716, August.
    5. Glomm, Gerhard & Ravikumar, B., 1997. "Productive government expenditures and long-run growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 183-204, January.
    6. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
    7. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    8. Oded Galor & David N. Weil, 1993. "The Gender Gap, Fertility, and Growth," NBER Working Papers 4550, National Bureau of Economic Research, Inc.
    9. Glomm, Gerhard, 1997. "Parental choice of human capital investment," Journal of Development Economics, Elsevier, vol. 53(1), pages 99-114, June.
    10. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S279-88, Part II, .
    11. Dessy, Sylvain E., 1998. "Education Subsidy, Fertility, and Growth," Cahiers de recherche 9822, Université Laval - Département d'économique.
    12. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
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