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Altruism, Fertility and Risk

  • Cordoba, Juan Carlos
  • Liu, Xiying

This paper studies fertility choices and fertility policies when children's earning abilities are random and parents are altruistic. We characterize equilibrium allocations arising in endowment economies with either complete or incomplete markets. Both models can replicate a number of empirical regularities, such as inequality, social mobility and fertility decreasing with ability, but the incomplete markets model provides a number of more plausible predictions. We find that fertility policies are generally welfare detrimental in our models even when fertility is inefficiently high.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 37481.

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Date of creation: 05 Apr 2014
Date of revision:
Handle: RePEc:isu:genres:37481
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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  1. Gaviria, Alejandro, 2002. "Intergenerational mobility, sibling inequality and borrowing constraints," Economics of Education Review, Elsevier, vol. 21(4), pages 331-340, August.
  2. Hosseini, Roozbeh & Jones, Larry E. & Shourideh, Ali, 2013. "Optimal contracting with dynastic altruism: Family size and per capita consumption," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1806-1840.
  3. Krusell, Per & Mukoyama, Toshihiko & Smith Jr., Anthony A., 2011. "Asset prices in a Huggett economy," Journal of Economic Theory, Elsevier, vol. 146(3), pages 812-844, May.
  4. Huggett, Mark, 1993. "The risk-free rate in heterogeneous-agent incomplete-insurance economies," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 953-969.
  5. Cordoba, Juan Carlos & Ripoll, Marla, 2014. "Intergenerational Transfers and the Fertility-Income Relationship," Staff General Research Papers 37662, Iowa State University, Department of Economics.
  6. Mikhail Golosov & Larry E. Jones, 2004. "Efficiency with Endogenous Population Growth," 2004 Meeting Papers 8, Society for Economic Dynamics.
  7. Omer Moav, 2005. "Cheap Children and the Persistence of Poverty," Economic Journal, Royal Economic Society, vol. 115(500), pages 88-110, 01.
  8. Matthias Doepke, 2004. "Accounting for Fertility Decline During the Transition to Growth," Journal of Economic Growth, Springer, vol. 9(3), pages 347-383, 09.
  9. S. Rao Aiyagari, 1993. "Uninsured idiosyncratic risk and aggregate saving," Working Papers 502, Federal Reserve Bank of Minneapolis.
  10. Marla Ripoll & Juan Carlos Cordoba, 2011. "A Contribution to the Economic Theory of Fertility," 2011 Meeting Papers 1207, Society for Economic Dynamics.
  11. Liao, Pei-Ju, 2013. "The one-child policy: A macroeconomic analysis," Journal of Development Economics, Elsevier, vol. 101(C), pages 49-62.
  12. Schoonbroodt, Alice & Tertilt, Michèle, 2014. "Property rights and efficiency in OLG models with endogenous fertility," Journal of Economic Theory, Elsevier, vol. 150(C), pages 551-582.
  13. Fernando Alvarez, 1999. "Social Mobility: The Barro-Becker Children Meet the Laitner-Loury Dynasties," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(1), pages 65-103, January.
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