The Political Economy and the Interaction between Endogenous Fertility and Inequality

Andreas Schäfer

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: We simulate a two period olg-model with heterogeneous agents. Parents receive utility from quantity and quality of their offspring. Generating a trade-off between the former and the latter, an increasing wage rate leads to higher opportunity costs, lower fertility, and higher quality of the children. All this leads to an intergenerational persistence in fertility decisions and wages. We show that growth increases inequality and fertility differentials controlled for the initial distribution of wealth. Furthermore, we endogenize redistribution by implementing a median voter-system. Due to fertility differentials the median-voter moves from upper to lower income percentiles.

Keywords: OLG-model; endogenous fertility; intergenerational persistence; inequality (search for similar items in EconPapers)
JEL-codes: D31 I2 J1 O0 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2004-06
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