Economic Growth Model with Fertility Incentives: A Theoretical Analysis Framework and Policy Simulation for China

Lei He () and Qin Wang
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Lei He: Hunan Key Laboratory of Macroeconomic Big Data Mining and Its Application, School of Business, Hunan Normal University, Changsha 410081, China
Qin Wang: Hunan Key Laboratory of Macroeconomic Big Data Mining and Its Application, School of Business, Hunan Normal University, Changsha 410081, China

Mathematics, 2024, vol. 12, issue 20, 1-25

Abstract: This study presents an overlapping generation model to examine the impact of fertility incentive policies on economic growth in China, incorporating endogenous fertility, education, and technological advancement by integrating unified growth theory with an R&D-based growth model. We analyze the impact of fertility incentive policies on economic growth by evaluating maternity insurance and public education. The results show that increasing the actual contribution rate of maternity insurance, maternity benefits, and public education expenditures can boost China’s fertility rate; nevertheless, extending maternity leave would not incentivize an increase in the fertility rate. The impact of fertility incentives on economic growth is ambiguous, depending upon the extent to which increased fertility dilutes aggregate human capital via technical advancement. If the dilution effect is weak, the sign will turn positive, and vice versa. The simulation analysis of the benchmark model indicates that the fertility incentive policy, which encompasses increasing the actual contribution rate of maternity insurance, maternity benefits, and public education expenditure, can foster economic growth in China by enhancing the fertility rate in the long term.

Keywords: overlapping generations model; maternity insurance; fertility incentive; public education; economic growth model (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2024
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