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A Reformulation of the Economic Theory of Fertility

  • Gary S. Becker
  • Robert J. Barro

When parents are altruistic toward children, the choices of fertility and consumption come from the maximization of a dynastic utility function. The maximization conditions imply first, an arbitrage condition for consumption across generations, and second, the equation of the benefit from an extra child to the net cost of rearing that child. These conditions imply that fertility in open economies depends positively on the world interest rate, on the degree of altruism, and on the growth of child-survival probabilities; and negatively on the rate of technical progress and the growth rate of social security. The growth of consumption across generations depends on changes in the net cost of rearing children, but not on interest rates or tirne preference. Even when we include life-cycle elements, we conclude that the growth of aggregate consumption per capita depends in the long run on the growth of consumption across generations. Thereby we show that real interest rates and growth rates of consumption per capita would be unrelated in the long run.

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Paper provided by Chicago - Population Research Center in its series University of Chicago - Population Research Center with number 85-11.

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Publication status: Published in Quarterly Journal of Economics, v. 103, no. 1 (February 1988): 1-25
Handle: RePEc:fth:chiprc:85-11
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  1. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S143-62, August.
  2. Summers, Lawrence H, 1981. "Capital Taxation and Accumulation in a Life Cycle Growth Model," American Economic Review, American Economic Association, vol. 71(4), pages 533-44, September.
  3. Eytan Sheshinski & Yoram Weiss, 1979. "Inequality Within and Between Families," NBER Working Papers 0405, National Bureau of Economic Research, Inc.
  4. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  5. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
  6. David E. Wildasin, 1989. "Non-Neutrallity of Debt with Endogenous Fertility," Discussion Paper Serie A 241, University of Bonn, Germany.
  7. Robert J. Willis, . "A Theory of the Equilibrium Interest Rate in an Overlapping Generations Model: Life Cycles, Institutions, and Population Growth," University of Chicago - Population Research Center 85-8, Chicago - Population Research Center.
  8. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  9. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1982. "Parental Preferences and Provision for Progeny," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 52-73, February.
  10. Razin, Assaf & Ben-Zion, Uri, 1975. "An Intergenerational Model of Population Growth," American Economic Review, American Economic Association, vol. 65(5), pages 923-33, December.
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