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Low fertility and long run growth in an economy with a large public sector

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Abstract

There is plenty of evidence that growth has a negative relation to fertility and dependency ratios. Recently it has been suggested that low fertility countries may be caught in a trap that is hard to get out of. One important mechanism in such a trap would be social interaction and its effect on the ideal family size. Such social interaction mechanisms are hard to capture in formal models, therefore we use an agent based simulation model to investigate the issue. In our experimental setup a stable growth and population path is provoked into a fertility trap by rising relative child costs linked to positive growth. Even rather large increases in child benefits are then insufficient to get out of the trap. However, the small number of children temporarily enables the economy to grow faster for several decades. Removing the adaptation of social norms turns out to disarm the trap.

Suggested Citation

  • Zamac, Jovan & Hallberg, Daniel & Lindh, Thomas, 2008. "Low fertility and long run growth in an economy with a large public sector," Arbetsrapport 2008:11, Institute for Futures Studies.
    • Handle: RePEc:hhs:ifswps:2008_011
    Note: ISSN: 1652-120X; ISBN: 978-91-85619-35-1
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    1. Berde, Éva & Kovács, Eszter, 2016. "A svéd és a magyar termékenységi arányszám összehasonlítása [Comparison of Swedish and Hungarian fertility levels]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1348-1374.
    2. Valeriy Makarov & Albert Bakhtizin & Elena Sushko & Alina Ageeva, 2018. "An Agent-Based Model of Eurasia and Simulation of Consequences of Large Infrastructure Projects," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 1102-1116.
    3. Jovan Žamac & Daniel Hallberg & Thomas Lindh, 2010. "Low Fertility and Long-Run Growth in an Economy with a Large Public Sector [Fécondité basse et croissance à long terme dans une économie à secteur public très développé]," European Journal of Population, Springer;European Association for Population Studies, vol. 26(2), pages 183-205, May.
    4. David E. Bloom & Alfonso Sousa-Poza, 2010. "Economic Consequences of Low Fertility in Europe," PGDA Working Papers 5410, Program on the Global Demography of Aging.
    5. Thomas Fent & Alexia Prskawetz & Belinda Aparicio Diaz, 2013. "Family policies in the context of low fertility and social structure," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 29(37), pages 963-998.
    6. David E. Bloom & Alfonso Sousa-Poza, 2010. "Introduction to Special Issue of the European Journal of Population: ‘Economic Consequences of Low Fertility in Europe’ [Introduction au numéro spécial de la Revue Européenne de Démographie: ‹ Cons," European Journal of Population, Springer;European Association for Population Studies, vol. 26(2), pages 127-139, May.
    7. Valerii Makarov & Albert Bakhtizin & Elena Sushko & Alina Ageeva, 2017. "Simulation of the socio-economic system of the Eurasian continent using the agent-based models," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 48, pages 122-139.

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    Keywords

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    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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