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

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  • Sebnem Kalemli-Ozcan

    (The University of Houston)

Abstract

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.

Suggested Citation

  • Sebnem Kalemli-Ozcan, 2002. "A Stochastic Model of Mortality, Fertility, and Human Capital Investment," Macroeconomics 0212009, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpma:0212009
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    More about this item

    Keywords

    Uncertainty; Precautionary demand; Quality-Quantity trade of; Growth;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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