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Human Capital, Fertility, and Economic Growth

Human Capital, Fertility, and Economic Growth - Human...

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Human Capital, Fertility, and Economic Growth Author(s): Gary S. Becker, Kevin M. Murphy, Robert Tamura Reviewed work(s): Source: Journal of Political Economy, Vol. 98, No. 5, Part 2: The Problem of Development: A Conference of the Institute for the Study of Free Enterprise Systems (Oct., 1990), pp. S12- S37 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/2937630 . Accessed: 28/11/2011 08:57 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected] The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to Journal of Political Economy. http://www.jstor.org
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Human Capital, Fertility, and Economic Growth GaryS. Becker and Kevin M. Murphy Universityof Chicago Robert Tamura Universityof Iowa Our analysis of growth assumes endogenous fertility and a rising rate of return on human capital as the stock of human capital in- creases. When human capital is abundant, rates of return on human capital investments are high relative to rates of return on children, whereas when human capital is scarce, rates of return on human capital are low relative to those on children. As a result, societies with limited human capital choose large families and invest little in each member; those with abundant human capital do the opposite. This leads to two stable steady states. One has large families and little human capital; the other has small families and perhaps growing human and physical capital. I. Introduction Economic growth has posed an intellectual challenge ever since the beginning of systematic economic analysis. Adam Smith claimed that growth was related to the division of labor, but he did not link them in a clear way. Thomas Malthus developed a formal model of a dynamic growth process in which each country converged toward a stationary Our research was supported by National Science Foundation grant SES-8520258 and by National Institute of Child Health and Human Development grant SSP 1 R37 HD22054. We had helpful comments from Edward Prescott, Sherwin Rosen, and Henry Wan and useful assistance from David Meltzer. Journal of Political Economy, 1990, vol. 98, no. 5, pt. 2] ? 1990 by The University of Chicago All rights reserved. 0022-3808/90/9805-0012$01.50 S12
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HUMAN CAPITAL S13 per capita income. According to his model, death rates fall and fertil- ity rises when incomes exceed the equilibrium level, and the opposite occurs when incomes are less than that level. Despite the influence of the Malthusian model on nineteenth-century economists, fertility fell rather than rose as incomes grew during the past 150 years in the West and other parts of the world.
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