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Intensive and extensive margins of fertility, capital accumulation, and economic welfare

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  • Momota, Akira

Abstract

This paper investigates the impact of low fertility on long-term capital accumulation and economic welfare. We find that the impact differs depending on whether the low fertility arises from a decrease in the fertility of mothers (the intensive margin of fertility) or the motherhood rate (the extensive margin of fertility). We show that an increase in the fertility of mothers decreases the capital stock and economic welfare. Conversely, we identify a U-shaped relationship between the extensive margin of fertility and the capital stock because of the existence of two opposing effects, such that the decline in fertility may reduce economic welfare. Furthermore, we show that an intragenerational income redistribution policy can eliminate the welfare loss resulting from the incomplete market.

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  • Momota, Akira, 2016. "Intensive and extensive margins of fertility, capital accumulation, and economic welfare," Journal of Public Economics, Elsevier, vol. 133(C), pages 90-110.
  • Handle: RePEc:eee:pubeco:v:133:y:2016:i:c:p:90-110
    DOI: 10.1016/j.jpubeco.2015.10.003
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    2. Krzysztof Makarski & Joanna Tyrowicz & Magda Malec, 2018. "Evaluating welfare and economic effects of raised fertility," GRAPE Working Papers 25, GRAPE Group for Research in Applied Economics.
    3. d'Albis, Hippolyte & Greulich, Angela & Ponthiere, Gregory, 2018. "Development, fertility and childbearing age: A Unified Growth Theory," Journal of Economic Theory, Elsevier, vol. 177(C), pages 461-494.
    4. d'Albis, Hippolyte & Greulich, Angela & Ponthiere, Gregory, 2018. "Development, fertility and childbearing age: A Unified Growth Theory," Journal of Economic Theory, Elsevier, vol. 177(C), pages 461-494.
    5. Johanna Etner & Natacha Raffin & Thomas Seegmuller, 2018. "Male reproductive health, fairness and optimal policies," EconomiX Working Papers 2018-32, University of Paris Nanterre, EconomiX.
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    8. d'Albis, Hippolyte & Greulich, Angela & Ponthiere, Gregory, 2018. "Development, fertility and childbearing age: A Unified Growth Theory," Journal of Economic Theory, Elsevier, vol. 177(C), pages 461-494.
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    More about this item

    Keywords

    Childlessness; Economic growth; Extensive margin of fertility; Income redistribution; Intensive margin of fertility; Overlapping generations;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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