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Fertility Choices, Human Capital Accumulation, and Endogenous Volatility

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  • Dimitrios Varvarigos

Abstract

In a three-period overlapping generations model, I show that different combinations of preference and technological parameters can lead to different patterns on the joint evolution of human capital and (endogenous) fertility choices. These patterns may include threshold effects and multiple equilibria as well as endogenous fluctuations. In the latter case, fertility is procyclical. Contrary to existing analyses, endogenous economic fluctuations emerge only when the substitution effects (rather than the income effects) dominate. I also show that the elasticity of intertemporal substitution may be an additional factor determining whether the economy can sustain a positive growth rate in the long-run.

Suggested Citation

  • Dimitrios Varvarigos, 2010. "Fertility Choices, Human Capital Accumulation, and Endogenous Volatility," Discussion Papers in Economics 11/08, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:11/08
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp11-08.pdf
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    References listed on IDEAS

    as
    1. Kalemli-Ozcan, Sebnem, 2003. "A stochastic model of mortality, fertility, and human capital investment," Journal of Development Economics, Elsevier, vol. 70(1), pages 103-118, February.
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    Keywords

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    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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