consumpton good enjoyment o investment good security in old age o missing

Consumpton good enjoyment o investment good security

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consumpton good – enjoyment o investment good - security in old age o missing markets in developing countries: social security funds, medical care, life insurance ect… -> these are missing in developing countries o pressing consumpton needs hinder the ability to save o children are assets par excellence: don’t need to be bought, embody income earning possibilites even if they are costly to some extent - mortality and fertlity: o infant mortality lowers the probability that the child will grow up and look afer the parents o diseases of childhood o possibility that the child will not be an adequate income earner o child may not look afer the parents in old age o possibility that the parents themselves might not antcipate bein around in old age o p = overall probability of having a give child grow up to look afer you o q = probability that the parents fnd it acceptable as a threshold probability of receiving support from at least one child -> infuenced by risk attude & depends in part on economic security o How many children do you need to have (each looking afer you with the probability of p ) so that the overall probability of having at least one child look afer you is at least q ? o Probability that none will look afer: ( 1 p ) n o Choose n just large enough so that: 1 −( 1 p ) n > q Downloaded by Vicky Gupta ([email protected]) lOMoARcPSD|3929542
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- Gender bias: o When there is gender bias and the household wishes to receive support of male children only, then they would see n as the number of boys only -> doubles the expected number of children - Informaton, income and fertlity: o Informaton: how is the social phenomenon of a falling death rate translated to the level of individual decision making? o Dependent on economic conditons: the poorer the region the greater antcipated probability of the child not earning enough to support, the greater the incentve to have more children to compensate this o Gender bias: diferent treatment of boys and girls & intrinsic valuaton of women in society - Hoarding vs. targetng: o Hoarding: children have to be stockpiled in advance, before we know which among them will provide the requisite support o Targetng: desired number of children can be atained sequentally -> lowers fertlity rate bc doesn’t have to be created in advance o A change in demographic regime from hoarding to targetng can lead to a drastc lowering of fertlity rates; depends on uncertaintes of parents - Cost of children: o Direct costs (food, cloths, health, school ect.) o Indirect/ opportunity costs (amount of income forgone in the process of bringing them up) -> proportonal with wage rate tmes the hours spend in oarentng o Low opportunity cost -> high fertlity rate; especially if wages for women are lower (gender bias) o High unemployment rates -> decrease in opportunity costs -> increased fertlity o Cost-beneft analysis to understand how diferent kind s of cost s have diferent sorts of demographic implicatons Downloaded by Vicky Gupta ([email protected]) lOMoARcPSD|3929542
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The efect of income improvements on fertlity:
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