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Endogenous Fertility and the Effects of Foreign Aid


  • Horn af Rantzien, Mia


An overlapping generations framework is employed in order to study consequences of the old-age security and producer goods motive for having children in a rural economy. The model predicts growth in total output combined with declining fertility and increasing population density and per capita output, if landholdings are initially greater than in stationary state. An increase in agricultural productivity, a decrease in the cost of raising children, and a transfer to adults increase fertility in the short run, while a transfer to the old decrease it. In stationary state, permanent positive productivity shifts cause higher population density but leave per capita consumption unchanged. Permanent reductions in the cost of raising children and permanent increases in transfers to adults reduce per capita consumption and increase population density, while permanent increases in transfers to the old have the opposite effect in the new stationary state.

Suggested Citation

  • Horn af Rantzien, Mia, 1994. "Endogenous Fertility and the Effects of Foreign Aid," SSE/EFI Working Paper Series in Economics and Finance 27, Stockholm School of Economics.
  • Handle: RePEc:hhs:hastef:0027

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    More about this item


    Endogenous fertility; foreign aid; population old age security;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets


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