Mortality, fertility and elderly care in a gendered growth model
The paper studies the interaction of publicly provided care for the elderly on demographic developments. A two-sex OLG model is used to examines how exogenous changes in mortality, the cost of children and the bargaining power of women influence fertility, public and private care for the elderly, and the length of education taken by women and men. The paper focuses especially on the interaction between declining mortality and the expansion of care for the elderly. In the model declining mortality can affect fertility differently according to how developed the economy is. At an early development stage, when public care is little developed, the effect of decreasing mortality on fertility can be positive, while at a later stage with higher levels of public care, the effect can be negative. The model is consistent with observed developments over the last century including fluctuations and decline in fertility, increases in the average age of giving birth, increasing levels of education with lessening differences in the education levels of women and men, increasing incomes, and increased public care for the elderly. In a small open economy where individuals live for five periods with uncertain lifetimes, the choices made by males and females are the result of a combination of utility maximization and negotiation. First, bargaining positions are formed through utility maximization given individual budget constraints, then the Nash bargaining solution determines the number of children and voting determines the level of public care for the elderly, and finally couples maximize a joint household welfare function to determine education, private care for the elderly and consumption. The only exogenous differences between women and men concern mortality, bargaining power and required time devoted to raising young children; otherwise women and men have identical utility functions and opportunities. Functional forms are chosen so that the model has a recursive nature with simple closed form solutions.
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