A Contribution to the Economic Theory of Fertility

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General

Serie

• Staff General Research Papers Archive

Resumen

• The evidence strongly suggests a robust negative relationship between income and fertility, and a positive relationship between income and longevity. This is puzzling for standard dynamic models. For instance, altruistic models that use the most standard preferences in macro --time separable CRRA with low elasticity of intertemporal substitution (EIS)-- correctly predict a positive longevity-income relationship for rich individuals, but also predict a positive fertility-income relationship, contrary to the data. We show that a non-separable formulation of preferences that allows for a low EIS but a high elasticity of intergenerational substitution (EGS) can simultaneously account for the evidence of declining demand for children and increasing demand for longevity as income increases. The model with a single elasticity cannot account for both. Our results suggests a major role for a new parameter in macro, the EGS. While the EIS mostly influences short-term economic decisions, the EGS influences mostly long-term economic choices.

autores

• Córdoba, Juan
• Ripoll, Marla

fecha de publicación

• 2011-06

Área temática

• D10 - Comportamiento de las economías domésticas y economía familiar: Generalidades
• D64 - Altruismo; Filantropía; Transferencias intergeneracionales
• D91 - Elección intemporal del consumidor; Modelos del ciclo de vida y ahorro
• J1 - Economía demográfica

Investigaciones

Líneas de investigación

• Altruism
• Fertility
• Frictions
• Non-separable Preferences

Información Adicional

Issue

• 33899