Fertility Choices, Human Capital Accumulation, and Endogenous Volatility

Dimitrios Varvarigos ()

No 11/08, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: In a three-period overlapping generations model, I show that different combinations of preference and technological parameters can lead to different patterns on the joint evolution of human capital and (endogenous) fertility choices. These patterns may include threshold effects and multiple equilibria as well as endogenous fluctuations. In the latter case, fertility is procyclical. Contrary to existing analyses, endogenous economic fluctuations emerge only when the substitution effects (rather than the income effects) dominate. I also show that the elasticity of intertemporal substitution may be an additional factor determining whether the economy can sustain a positive growth rate in the long-run.

Keywords: Fertility; Human capital; Cycles (search for similar items in EconPapers)
JEL-codes: J13 O41 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-dge and nep-hrm
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