Fk n k sfk population growth rate increases n n

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Unformatted text preview: )k Steady state: Steady – s.f(k) = (n + δ)k s.f(k) Population growth rate increases: n’ > n Capital per worker and output per worker decline (k’* < k*; y’* < y*) worker Created by: Dr Sumon Bhaumik http://www.sumonbhaumik.net/ Unitary household model of fertility [1] Parents’ utility Parents – U = U(x, n, z; α) U(x, » » » » x ≡ parents’ consumption of goods and services n ≡ number of children z ≡ average quality of children α ≡ exogenous factors Human capital of children Human – z = Z(c, t; β)/n Z(c, » » » c ≡ children’s consumption of goods and services t ≡ proportion of endowed time parents spend on children β ≡ exogenous factors Created by: Dr Sumon Bhaumik http://www.sumonbhaumik.net/ Unitary household model of fertility [2] Assumption Assumption – Total endowment of time per set of parents is 1 Optimisation problem of parents Optimisation – Max U(x, n, z; α) Max Sub to z = Z(c, t; β) Z(c, w(1 – t) = pxx + pcc w(1 t) Trade off Trade – Between greater consumption of goods and services, the number of children they raise, and the human capital (or quality) of these children Created by: Dr Sumon Bhaumik http://www.sumonbhaumik.net/ Unitary household model of fertility [3] Impact of economic growth Impact – Increase in wage rate (w) – Increase in (relative) returns to skilled labour (α) – Greater provision of public goods like education (β) Implication for empirical research Implication – Household income is endogenous to the choice of number (and Household quality) of children quality) Shortcomings Shortcomings – Does not take into consideration impact of inter-gender differences gender in fertility preferences in – Does not take into consideration impact of social norms Created by: Dr Sumon Bhaumik http://www.sumonbhaumik.net/ Women’s fertility preference Women bear the entire physical risk of bearing children Women – In Africa, 1 in 100 births result in the death of the mother Women have very different preferences both with respect to number of Women of children, and about the proportion of household resources spent on children on – Additional income in the hands of mothers result in larger increases in ases child health and education than similar increase in the incomes of the fathers fathers Women’s observed fertility rates declines strongly with their level of Women educational attainment, and the quality of children of educated women is educational higher higher –...
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