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Children and the Wealth of Nations

  • Cordoba, Juan Carlos

This paper uses calibrated versions of the Barro-Becker model to compute measures of well-being for 142 countries between 1970 and 2005. In the model, individuals are altruistic toward their descendants: they enjoy the well-being of their children. We derive a model based measure of effective "quantity of life," the effective life span of an individual. It depends positively on life expectancy, degree of altruism and number of children, and negatively on the rate of time discounting. Our calculations suggest a major� quantity-quantity trade-off: for the period 1970-2005 the gains in quantity of life due to longevity improvements were mostly offset or overcome by the losses due to fertility reductions. Depending on the precise calibration, the effective quantity of life either remained roughly constant or fell substantially� around the world. For many countries the effective growth rate of well-being, one that takes into account the quantity and quality of life, is significantly below the growth rate of per-capita GDP.� Our findings challenge the wide-spread belief that development through fertility reductions is a free lunch.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/p14989-2012-03-16.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 34989.

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Date of creation: 15 Mar 2012
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Handle: RePEc:isu:genres:34989
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. Birchenall, Javier A. & Soares, Rodrigo R., 2007. "Altruism, Fertility, and the Value of Children: Health Policy Evaluation and Intergenerational Welfare," IZA Discussion Papers 2783, Institute for the Study of Labor (IZA).
  2. Rodolfo E. Manuelli & Ananth Seshadri, 2009. "Explaining International Fertility Differences," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 771-807, May.
  3. Cordoba, Juan Carlos & Ripoll, Marla, 2012. "Life, Death and World Inequality," Staff General Research Papers 34945, Iowa State University, Department of Economics.
  4. Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2003. "The Quantity and Quality of Life and the Evolution of World Inequality," NBER Working Papers 9765, National Bureau of Economic Research, Inc.
  5. Córdoba, Juan Carlos & Verdier, Geneviève, 2008. "Inequality and growth: Some welfare calculations," Journal of Economic Dynamics and Control, Elsevier, vol. 32(6), pages 1812-1829, June.
  6. Kevin M. Murphy & Robert H. Topel, 2006. "The Value of Health and Longevity," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 871-904, October.
  7. Marla Ripoll & Juan Carlos Cordoba, 2011. "A Contribution to the Economic Theory of Fertility," 2011 Meeting Papers 1207, Society for Economic Dynamics.
  8. Viscusi, W Kip, 1993. "The Value of Risks to Life and Health," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1912-46, December.
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