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A Theory of Economic Development with Endogenous Fertility

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  • Ceyhun Elgin

Abstract

In this paper I build a unified model of economic growth to account for the time-series evolution of output, fertility, and population in the industrialization of an economy. Specifically, I merge the unified growth models of Galor and Weil [American Economic Review 90 (2000), 806–828] and Hansen and Prescott [American Economic Review 92 (2002), 1205–1217] to capture the importance of human capital formation, fertility decline, and the transition from agriculture to industry in transition from stagnation to growth. Moreover, I also incorporate young adult mortality into the model. Initially, the aggregate human capital and return to education are low and the mortality rate is high; therefore parents invest in quantity of children. Once sufficient human capital is accumulated and mortality rates are reduced, thanks to increasing life expectancy, with the activation of the modern human capital–intensive sector, parents start to invest in the quality of their children. The simulation of the model economy improves upon the quantitative performance of the existing literature and successfully captures the evolution of fertility, population, and GDP in the British economy between 1750 and 2000.
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  • Ceyhun Elgin, 2010. "A Theory of Economic Development with Endogenous Fertility," Working Papers 2010/06, Bogazici University, Department of Economics.
    • Handle: RePEc:bou:wpaper:2010/06
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    References listed on IDEAS

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    1. Tamura, Robert, 1996. "From decay to growth: A demographic transition to economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1237-1261.
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    Cited by:

    1. Ron W. Nielsen, 2017. "Changing the Direction of the Economic and Demographic Research," Papers 1708.08673, arXiv.org.
    2. Ron W. NIELSEN, 2017. "Changing the direction of the economic and demographic research," Journal of Economics Library, KSP Journals, vol. 4(3), pages 288-309, September.
    3. Thomas I. Renström & Luca Spataro, 2021. "Optimal taxation in an endogenous growth model with variable population and public expenditure," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(4), pages 639-659, August.

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