Aggregate Fertility and Household Savings: A General Equilibrium Analysis using Micro Data

Abhijit Banerjee, Xin Meng (), Tommaso Porzio and Nancy Qian

No 20050, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This study uses micro data and an overlapping generations (OLG) model to show that general equilibrium (GE) forces are critical for understanding the relationship between aggregate fertility and household savings. First, we document that parents perceive children as an important source of old-age support and that, in partial equilibrium (PE), increased fertility lowers household savings. Then, we construct an OLG model that parametrically matches the PE empirical evidence. Finally, we extend the model to conduct a GE analysis and show that under standard assumptions and with the parameters implied by the data, GE forces can substantially offset the PE effects. Thus, focusing only on the PE can substantially overstate the effect of aggregate fertility on household savings.

JEL-codes: J11 J13 O11 O12 O4 O53 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-dge and nep-gro
Note: DEV EFG
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Citations: View citations in EconPapers (47)

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Related works:
Working Paper: Aggregate Fertility and Household Savings: A General Equilibrium Analysis using Micro Data (2014)
Working Paper: Aggregate Fertility and Household Savings: A General Equilibrium Analysis using Micro Data (2014)
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