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Income Inquality, Fertility Choice, and Economic Growth: Theory and Evidence

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Abstract

The growing literature on inequality and economic growth has focused on the adverse effects of income inequality on investment. We focus on the negative relationship between inequality and economic growth, hypothesising that inequality lowers economic growth by raising the fertility rate. Unlike other studies, our analysis does not rely on incomplete markets, or on parental altruism. Instead, it uses the fact that a larger number of children reduces the riskiness of the financial payoff from having children, a factor which is more important for the poor than for the wealthy. Cross country econometric tests using a newly collated dataset of income distribution support the proposition that much of the growth enhancing effects of an equitable income distribution may come from its negative effect on fertility rates.

Suggested Citation

  • Khoo, L. & Dennis, B., 1999. "Income Inquality, Fertility Choice, and Economic Growth: Theory and Evidence," Papers 687, Harvard - Institute for International Development.
  • Handle: RePEc:fth:harvid:687
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    Cited by:

    1. Christophe Ehrhart, 2009. "The effects of inequality on growth: a survey of the theoretical and empirical literature," Working Papers 107, ECINEQ, Society for the Study of Economic Inequality.
    2. Hasan Bicak & Glenn Jenkins, 1999. "Costs And Pricing Policies Related To Transporting Water By Tanker From Turkey To North Cyprus," Development Discussion Papers 1999-07, JDI Executive Programs.
    3. David Castells-Quintana & Vicente Royuela, 2017. "Tracking positive and negative effects of inequality on long-run growth," Empirical Economics, Springer, vol. 53(4), pages 1349-1378, December.
    4. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.
    5. Mazhar Yasin MUGHAL & Barassou DIAWARA, 2011. "Explaining Income Inequalities in Developing Countries:the Role of Human Capital," Working Papers 2011-2012_2, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Dec 2011.
    6. Michael Sarel, 1997. "How Macroeconomic Factors Affect Income Distribution; The Cross-Country Evidence," IMF Working Papers 97/152, International Monetary Fund.

    More about this item

    Keywords

    FERTILITY ; INCOME ; ECONOMIC GROWTH;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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