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Inequality and Growth: Why Differential Fertility Matters

  • David de la Croix

    (UCLA)

  • Matthias Doepke

    (UCLA)

We develop a new theoretical link between inequality and growth. In our model, fertility and education decisions are interdependent. Poor parents decide to have many children and invest little in education. A mean-preserving spread in the income distribution increases the fertility differential between the rich and the poor, which implies that more weight gets placed on families who provide little education. Consequently, an increase in inequality lowers average education and, therefore, growth. We find that this fertility-differential effect accounts for most of the empirical relationship between inequality and growth. (JEL J13, O40)

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Paper provided by UCLA Department of Economics in its series UCLA Economics Working Papers with number 803.

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Date of creation: 01 Jun 2001
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Handle: RePEc:cla:uclawp:803
Contact details of provider: Web page: http://www.econ.ucla.edu/

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  21. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2000. "Vintage Human Capital, Demographic Trends and Endogenous Growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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  25. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  26. Arleen Leibowitz, 1974. "Home Investments in Children," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 111-135 National Bureau of Economic Research, Inc.
  27. Daron Acemoglu & Kenneth Rogoff & Michael Woodford, 2009. "NBER Macroeconomics Annual 2008, Volume 23," NBER Books, National Bureau of Economic Research, Inc, number acem08-1.
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