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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
Date of revision:
Handle: RePEc:wpa:wuwpma:0212009
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  1. Blau Francine D & Kahn Lawrence M, 2007. "The Gender Pay Gap," The Economists' Voice, De Gruyter, vol. 4(4), pages 1-6, June.
  2. 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.
  3. 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.
  4. 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.
  5. repec:tpr:qjecon:v:103:y:1988:i:1:p:1-25 is not listed on IDEAS
  6. Dahan, M & Tsiddon, D, 1996. "Demographic Transition, Income Distribution and Economic Growth," Papers 42-96, Tel Aviv - the Sackler Institute of Economic Studies.
  7. 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.
  8. 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.
  9. Brezis, Elise S., 2001. "Social classes, demographic transition and economic growth," European Economic Review, Elsevier, vol. 45(4-6), pages 707-717, May.
  10. 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.
  11. Galor, Oded & Weil, David, 1995. "The Gender Gap, Fertility and Growth," CEPR Discussion Papers 1157, C.E.P.R. Discussion Papers.
  12. Sah, Raaj Kumar, 1991. "The Effects of Child Mortality Changes on Fertility Choice and Parental Welfare," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 582-606, June.
  13. 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.
  14. 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.
  15. Galor, Oded & Weil, David, 1999. "From Malthusian Stagnation to Modern Growth," CEPR Discussion Papers 2082, C.E.P.R. Discussion Papers.
  16. 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.
  17. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, June.
  18. Robert Tamura, 2004. "Human capital and economic development," FRB Atlanta Working Paper 2004-34, Federal Reserve Bank of Atlanta.
  19. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
  20. Simon Appleton & Francis Teal, 2002. "Working Paper 39 - Human Capital and Economic Development," Working Paper Series 173, African Development Bank.
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