Consequences of Permanent Changes in Child Mortality on Parental Welfare and Population Density
In an overlapping generations framework, the effects of exogenous changes in child mortality on fertility and parental welfare in the short run and on fertility, population density and parental welfare in the long run is analyzed in a primitive, land-constrained economy. In a first step a perfectly foreseen rate of survival of children into adulthood is analyzed. It is shown that a decrease in child mortality always increase parental welfare in the short run while the direction of the change in fertility choice depends on the relative risk aversion. In the long run, however, parental welfare is reduced independently of the degree of the relative risk aversion. In a second step, uncertainty about the survival rate is considered. It is shown that the effects on fertility choice in the short run and on population density in the long run remains qualitatively the same as in the case with a perfectly foreseen survival rate.
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