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A Stochastic Model of Mortality, Fertility, and Human Capital Investment

  • Sebnem Kalemli-Ozcan

    (The University of Houston)

This paper examines the relationship between fertility and human capital investment, and it’s implications for economic growth, focusing on the e ects of declining mortality. Unlike the existing literature, this paper stresses the role of uncertainty about the number of surviving children. If the marginal utility of a surviving child is convex then there will be a precautionary demand for children. As the mortality rate and thus uncertainty falls, this demand decreases. Furthermore, lower mortality encourages educational investment in children. The key result is that this empirically observed quality-quantity trade o is realized only if uncertainty is incorporated into individual’s optimization problem.

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Paper provided by EconWPA in its series Macroeconomics with number 0212009.

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Date of creation: 17 Dec 2002
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Handle: RePEc:wpa:wuwpma:0212009
Note: Type of Document - Tex; prepared on IBM PC ; to print on HP;
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  1. Gary S. Becker & Robert J. Barro, . "A Reformulation of the Economic Theory of Fertility," University of Chicago - Population Research Center 85-11, Chicago - Population Research Center.
  2. Ram, Rati & Schultz, Theodore W, 1979. "Life Span, Health, Savings, and Productivity," Economic Development and Cultural Change, University of Chicago Press, vol. 27(3), pages 399-421, April.
  3. Sah, R.K., 1989. "The Effects Of Mortality Changes On Fertility Choice And Individual Welfare: Some Theoretical Predictions," Papers 599, Yale - Economic Growth Center.
  4. Jones Charles I., 2001. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(2), pages 1-45, August.
  5. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
  6. Robert Tamura, 2004. "Human capital and economic development," FRB Atlanta Working Paper 2004-34, Federal Reserve Bank of Atlanta.
  7. Becker, Gary S, 1981. "Altruism in the Family and Selfishness in the Market Place," Economica, London School of Economics and Political Science, vol. 48(189), pages 1-15, February.
  8. Galor, Oded & Weil, David, 1995. "The Gender Gap, Fertility and Growth," CEPR Discussion Papers 1157, C.E.P.R. Discussion Papers.
  9. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
  10. Robert J. Barro, 1996. "Determinants of Economic Growth: A Cross-Country Empirical Study," NBER Working Papers 5698, National Bureau of Economic Research, Inc.
  11. Gary S. Becker & Kevin M. Murphy & Robert F. Tamura, 1990. "Human Capital, Fertility, and Economic Growth," NBER Working Papers 3414, National Bureau of Economic Research, Inc.
  12. Ben-Porath, Yoram, 1976. "Fertility Response to Child Mortality: Micro Data from Israel," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S163-78, August.
  13. O'Hara, Donald J, 1975. "Microeconomic Aspects of the Demographic Transition," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1203-16, December.
  14. Blau Francine D & Kahn Lawrence M, 2007. "The Gender Pay Gap," The Economists' Voice, De Gruyter, vol. 4(4), pages 1-6, June.
  15. Simon Appleton & Francis Teal, 2002. "Working Paper 39 - Human Capital and Economic Development," Working Paper Series 173, African Development Bank.
  16. Galor, Oded & Weil, David, 1999. "From Malthusian Stagnation to Modern Growth," CEPR Discussion Papers 2082, C.E.P.R. Discussion Papers.
  17. Brezis, Elise S., 2001. "Social classes, demographic transition and economic growth," European Economic Review, Elsevier, vol. 45(4-6), pages 707-717, May.
  18. Dahan, Momi & Tsiddon, Daniel, 1998. "Demographic Transition, Income Distribution, and Economic Growth," Journal of Economic Growth, Springer, vol. 3(1), pages 29-52, March.
  19. Kalemli-Ozcan, Sebnem & Ryder, Harl E. & Weil, David N., 2000. "Mortality decline, human capital investment, and economic growth," Journal of Development Economics, Elsevier, vol. 62(1), pages 1-23, June.
  20. Gene M. Grossman (ed.), 1996. "Economic Growth," Books, Edward Elgar Publishing, volume 0, number 553.
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