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Population, Unemployment and Economic Growth Cycles: A Further Explanatory Perspective


  • Luciano Fanati
  • Piero Manfredi


In this paper we investigate the dynamic interaction between economic growth, unemployment, income distribution and population growth. The reference framework combines rational behaviour of agents with endogenous fertility and unemployment, while profits are the determinant of the accumulation of firms. In particular the supply of labour is determined by the micro-founded fertility choices of individuals. We first demonstrate, consistently with the empirical evidence, the existence of a positive income growth trend with sustained oscillations, therefore providing an alternative explanation of the relation between growth and cycle. Moreover interesting results are given on the relation between unemployment and growth. So far the literature has traditionally shown a negative relation between unemployment and growth (with the exception of the positive relation arising in a Schumpeter 'creative' disruption context). In contrast, we find a twofold effect of unemployment (via its effects on population) on economic growth: this can be both positive or negative depending on the relative level of the cost of childrearing of employed and unemployed persons, and on the level of unemployment benefits. This allows us to argue that an increase in unemployment benefit-as has occurred in recent years in many countries such as France and Spain-could lead to wide demo-economic fluctuations and to a positive effect of unemployment on economic growth. Copyright Blackwell Publishing Ltd 2003.

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  • Luciano Fanati & Piero Manfredi, 2003. "Population, Unemployment and Economic Growth Cycles: A Further Explanatory Perspective," Metroeconomica, Wiley Blackwell, vol. 54(2-3), pages 179-207, May.
  • Handle: RePEc:bla:metroe:v:54:y:2003:i:2-3:p:179-207

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    References listed on IDEAS

    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    2. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
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    7. Benhabib Jess & Perli Roberto, 1994. "Uniqueness and Indeterminacy: On the Dynamics of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 63(1), pages 113-142, June.
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    9. David N. Weil & Oded Galor, 1999. "From Malthusian Stagnation to Modern Growth," American Economic Review, American Economic Association, vol. 89(2), pages 150-154, May.
    10. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
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    12. Rowthorn, Robert, 1995. "Capital Formation and Unemployment," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 26-39, Spring.
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    14. Fanti, Luciano & Manfredi, Piero, 2009. "Neoclassical production theory and growth with unemployment: The stability issue revisited," Structural Change and Economic Dynamics, Elsevier, vol. 20(2), pages 126-135, June.
    15. Strulik, Holger, 1999. "Demographic Transition, Stagnation, and Demoeconomic Cycles in a Model for the Less Developed Economy," Journal of Macroeconomics, Elsevier, vol. 21(2), pages 397-413, April.
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    1. repec:bla:metroe:v:68:y:2017:i:4:p:699-729 is not listed on IDEAS
    2. Manfredi, Piero & Fanti, Luciano, 2006. "The complex effects of demographic heterogeneity on the interaction between the economy and population," Structural Change and Economic Dynamics, Elsevier, vol. 17(2), pages 148-173, June.
    3. Orlando Gomes, 2010. "Endogenous Growth, Price Stability And Market Disequilibria," Metroeconomica, Wiley Blackwell, vol. 61(1), pages 3-34, February.
    4. Roa Maria J & Vazquez Francisco Jose & Saura Dulce, 2008. "Unemployment and Economic Growth Cycles," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 12(2), pages 1-21, May.
    5. Luciano Fanti & Mimmo Iannelli & Piero Manfredi, 2010. "Endogenous Age Structure in Descriptive Macroeconomic Growth Models: A General Framework and Some Steady State Analysis," Chapters,in: Institutional and Social Dynamics of Growth and Distribution, chapter 9 Edward Elgar Publishing.
    6. Wang, Qingfeng & Sun, Xu, 2016. "The Role of Socio-political and Economic Factors in Fertility Decline: A Cross-country Analysis," World Development, Elsevier, vol. 87(C), pages 360-370.
    7. Fanti, Luciano & Manfredi, Piero, 2009. "Neoclassical production theory and growth with unemployment: The stability issue revisited," Structural Change and Economic Dynamics, Elsevier, vol. 20(2), pages 126-135, June.
    8. Roa, María José & Saura, Dulce & Vázquez, Francisco J., 2011. "Economic growth, labor market and demographic patterns," Structural Change and Economic Dynamics, Elsevier, vol. 22(1), pages 81-91, February.

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