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

Author

Listed:
  • Marla Ripoll

    (University of Pittsburgh)

  • Juan Cordoba

    (Iowa State University)

Abstract

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 larger 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 for the U.S.

Suggested Citation

  • Marla Ripoll & Juan Cordoba, 2017. "The Elasticity of Intergenerational Substitution, Parental Altruism, and Fertility Choice," 2017 Meeting Papers 428, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:428
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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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