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Fertility and regulated wages in an OLG model of neoclassical growth: Pensions and old age support

Author

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  • Luciano Fanti
  • Luca Gori

Abstract

Since little attention has been paid to the effects of the regulation of wages on individuals' fertility choice, this paper investigates such effects within a standard OLG model of neoclassical growth. Some new results, so far escaped closer scrutiny by the increasing literature investigating economic growth and fertility, and which may have interesting policy implications, emerge: introducing minimum wages may, under suitable conditions, (1) have a favourable impact on the long-run outcomes of the economy; and (2) reduce the population growth rate. This occurs more likely when both sufficiently high capital's weight in technology and unemployment benefits do exist. Interestingly, these results are robust to different extensions introducing pensions and intra-family transfers. Therefore, to the extent that the absence of unions and of any regulation of wages are related with low wages, and the weight of capital in the distribution is increasing, the findings of this work also offer some policy implications which are, especially for developing countries in which the population growth may be too high, very interesting.

Suggested Citation

  • Luciano Fanti & Luca Gori, 2008. "Fertility and regulated wages in an OLG model of neoclassical growth: Pensions and old age support," Discussion Papers 2008/70, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  • Handle: RePEc:pie:dsedps:2008/70
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    File URL: http://www.ec.unipi.it/documents/Ricerca/papers/2008-70.pdf
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    Cited by:

    1. Fanti, Luciano & Gori, Luca, 2010. "Child policy solutions for the unemployment problem," Economics Letters, Elsevier, vol. 109(3), pages 147-149, December.
    2. Luciano Fanti & Luca Gori, 2009. "Longevity, fertility and PAYG pension systems sustainability," Discussion Papers 2009/77, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Luciano Fanti & Luca Gori, 2012. "Endogenous Lifetime in an Overlapping-Generations Small Open Economy," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(2), pages 121-152, June.
    4. Luciano Fanti & Luca Gori, 2011. "On economic growth and minimum wages," Journal of Economics, Springer, vol. 103(1), pages 59-82, May.
    5. Manuela Gussoni - Andrea Mangani, 2009. "The impact of public funding for innovation on firms' R&D investments: Do R&D cooperation and appropriability matter?," Discussion Papers 2009/90, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    6. Lorenzo Corsini & Elisabetta Olivieri, 2008. "Technological Change and the Wage Differential between Skilled and Unskilled Workers: Evidence from Italy," Discussion Papers 2008/73, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    7. Luca Gori, 2009. "Endogenous fertility, family policy and multiple equilibria," Discussion Papers 2009/79, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    8. Luciano Fanti & Luca Gori, 2009. "Endogenous fertility, endogenous lifetime and economic growth: the role of health and child policies," Discussion Papers 2009/91, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    9. Luciano Fanti & Luca Gori, 2008. "PAYG pensions and economic cycles: exogenous versus endogenous fertility," Discussion Papers 2008/75, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

    More about this item

    Keywords

    Minimum wage; Unemployment; Endogenous fertility;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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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