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Intergenerational Transfers and Demographic Transition

  • K Blackburn
  • G P Cipriani

This paper presents an analysis of demographic transition based on the endogenous evolution of intergenerational transfers along an economy's endogenous path of development. Two-period-lived agents belonging to overlapping generations choose optimally their desired levels of consumption and fertility, together with their desired sizes of transfers to both parents and children. Parents are more efficient than children in producing output, but some parental time must be devoted to child-rearing. At low levels of development, fertility is high and the flow of net intergenerational transfers is from the young to the old. At high levels of development, fertility is low and the flow of net transfers is from the old to the young. These results accord strongly with empirical observations and the analysis may be seen as formalising, for the first time, a long-standing and well-respected hypothesis in the demographic transition literature.

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Paper provided by Economics, The University of Manchester in its series The School of Economics Discussion Paper Series with number 0218.

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Date of creation: 2002
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Handle: RePEc:man:sespap:0218
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