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

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  • Marla Ripoll

Abstract

Dynastic models common in macroeconomics use a single parameter to control the willingnessof individuals to substitute consumption both intertemporally, or across periods, and intergen-erationally, or across parents and their children. This paper defines the concept of elasticity ofintergenerational substitution (EGS), and extends a standard dynastic model in order to disen-tangle the EGS from the EIS, or elasticity of intertemporal substitution. A calibrated versionof the model lends strong support to the notion that the EGS is significantly large than one,and probably around 2.5. In contrast, estimates of the EIS suggests that it is lower than one.What disciplines the identification is the need to match empirically plausible fertility rates forthe U.S.

Suggested Citation

  • Marla Ripoll, 2014. "The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice," Working Paper 5658, Department of Economics, University of Pittsburgh.
  • Handle: RePEc:pit:wpaper:5658
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    References listed on IDEAS

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    Cited by:

    1. Doepke, M. & Tertilt, M., 2016. "Families in Macroeconomics," Handbook of Macroeconomics, Elsevier.
    2. Juan Carlos Cordoba, 2015. "Children, Dynastic Altruism and the Wealth of Nations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 774-791, October.
    3. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, Elsevier.
    4. Liu, Xiying, 2015. "Optimal population and policy implications," ISU General Staff Papers 201501010800005546, Iowa State University, Department of Economics.

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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