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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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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 34989.

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Date of creation: 15 Mar 2012
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Handle: RePEc:isu:genres:34989
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Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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  1. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
  2. Birchenall, Javier A. & Soares, Rodrigo R., 2009. "Altruism, fertility, and the value of children: Health policy evaluation and intergenerational welfare," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 280-295, February.
  3. Gary S. Becker & Robert J. Barro, 1988. "A Reformulation of the Economic Theory of Fertility," The Quarterly Journal of Economics, Oxford University Press, vol. 103(1), pages 1-25.
  4. Cordoba, Juan Carlos & Ripoll, Marla, 2011. "A Contribution to the Economic Theory of Fertility," Staff General Research Papers Archive 33899, Iowa State University, Department of Economics.
  5. 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.
  6. Eve Chiapello & A. Hurand, 2011. "Contribution," Post-Print hal-00681170, HAL.
  7. Robert J. Barro & Gary S. Becker, . "Fertility Choice in a Model of Economic Growth," University of Chicago - Population Research Center 88-8, Chicago - Population Research Center.
  8. Cordoba, Juan Carlos & Verdier, Genevieve, 2010. "Inequality and Growth: Some Welfare Calculations," Staff General Research Papers Archive 32119, Iowa State University, Department of Economics.
  9. Rodolfo E. Manuelli & Ananth Seshadri, 2009. "Explaining International Fertility Differences," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 771-807.
  10. 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.
  11. 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.
  12. Cordoba, Juan Carlos & Ripoll, Marla, 2012. "Life, Death and World Inequality," Staff General Research Papers Archive 34945, Iowa State University, Department of Economics.
  13. repec:reg:rpubli:282 is not listed on IDEAS
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