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Demographic Transition and Economic Welfare: The Role of In-Cash and In-Kind Transfers

Listed author(s):
  • Stephen M. Miller

    (University of Nevada, Las Vegas and University of Connecticut)

  • Kyriakos Neanidis

    (University of Manchester)

Do in-cash and in-kind transfers to families affect parental fertility choices and economic welfare differently? We examine this question via a demographic transition channel in the context of a two-period overlapping generations model. In childhood, reproductive agents face a non-zero probability of death, while as adults, they allocate their time to work, leisure, and child rearing activities. Health status in adulthood exhibits "state dependence," as it depends on health in childhood. We find that cash transfers lead to both higher fertility and welfare if parents strongly value the quantity of their children. This positive welfare effect dominates an indirect negative welfare effect due to a lower growth rate. But, if parents value the quality of their children, in-kind transfers yield greater welfare, along with lower fertility and higher economic growth.

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File URL: http://web2.uconn.edu/economics/working/2014-24.pdf
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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2014-24.

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Length: 30 pages
Date of creation: Sep 2014
Handle: RePEc:uct:uconnp:2014-24
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