------old -accounting for fertility decline

------old -accounting for fertility decline - Growth and...

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Growth and Fertility in the Long Run Matthias Doepke The University of Chicago May 2000 Abstract This paper develops a theory that accounts for three stylized facts concerning growth and fertility in the long run. First, economies start in a “Malthusian Regime” with stagnant living standards and high fertility. Second, ultimately a “Growth Re- gime” is reached in which per capita income grows at near-constant rates, and fertility is low. Third, the speed and timing of the fertility decline during the transition from the Malthusian Regime to the Growth Regime differs across countries. I show that this development pattern can be reproduced by a theory consisting of three key el- ements: an agricultural production function, an industrial production function, and the quantity-quality model of fertility. The transition from Malthusian stagnation to growth and the ensuing fall in fertility is an endogenous feature of the model that occurs inevitably, regardless of initial conditions or policies. The speed of the fertility transition depends on policies that affect the opportunity cost of education, namely education subsidies and child-labor restrictions. I thank the members of my thesis committee Robert Lucas (chair), Gary Becker, Edward Prescott, and Robert Townsend for their guidance and encouragement. Workshop participants at Chicago, the SED an- nual meetings, the Max Planck Institute for Demography, the Federal Reserve Bank of Minneapolis, and many other institutions provided many helpful comments. I also benefited from suggestions by Daria Za- kharova, Sylvain Dessy, and Rui Zhao. Financial support by the University of Chicago and the Frank H. Knight Fellowship Fund is gratefully acknowleged. E-mail: [email protected] Address: 5118 S Kimbark Ave, Chicago, IL 60615.
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1 Introduction Stylized facts have played an important role in the theory of economic growth, both as a tool for summarizing the main features of the data, and as a benchmark against which the success of alternative models can be evaluated. A limitation of the common list of growth facts, due to Kaldor (1963), is that it describes only the recent experience of developed countries. Kaldor’s list starts with the observation that output per capita tends to grow over time. While this has been the case for a number of countries since the Industrial Rev- olution, most of history was characterized by stagnation in living standards. In this paper I develop a theory that accounts for a set of stylized facts which describe the behavior of growth and fertility in the long run. The theory generates an endogenous transition from stagnation to growth. Kaldor did not mention fertility or population in his list of growth facts, since population growth seemed to be of minor importance for growth in industrial countries. In contrast, in my theory interactions between income and population will be of central importance for explaining long-run growth.
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