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The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice

Listed author(s):
  • Cordoba, Juan Carlos
  • Ripoll, Marla

Dynastic models common in macroeconomics use a single parameter to control the willingness of individuals to substitute consumption both intertemporally, or across periods, and intergenerationally, or across parents and their children. This paper defines the concept of Elasticity of Intergenerational Substitution (EGS), and extends a standard dynastic model in order to disentangle the EGS from the EIS, or Elasticity of Intertemporal Substitution. A calibrated version of the model lends strong support to the notion that the EGS is significantly large than 1, and probably around 2.5. In contrast, estimates of the EIS suggests that it is lower than 1. What disciplines the identification is the need to match empirically plausible fertility rates for the U.S.

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File URL: http://www2.econ.iastate.edu/papers/p17765-2014-08-01.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 37765.

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Date of creation: 01 Aug 2014
Handle: RePEc:isu:genres:37765
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Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  11. 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.
  12. Dickie, Mark & Messman, Victoria L., 2004. "Parental altruism and the value of avoiding acute illness: are kids worth more than parents?," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1146-1174, November.
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  25. repec:reg:rpubli:282 is not listed on IDEAS
  26. Juan Carlos Córdoba & Marla Ripoll, 2016. "Intergenerational Transfers and the Fertility–Income Relationship," Economic Journal, Royal Economic Society, vol. 126(593), pages 949-977, 06.
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