An Existence Theorem on the Stationary State of Income Distribution and Population Growth

C Y Cyrus Chu

International Economic Review, 1990, vol. 31, issue 1, 171-85

Abstract: Through a utility-maximizing process, individuals derive their optimal fertility and bequest decisions both as functions of their initial socioeconomic backgrounds. The combination of these two decisions form a multitype Galton-Watson process. Under weak assumptions, it is proved that the economy will converge to a unique stationary state that implies both a constant population growth rate and a time-invariant income distribution. As such, this paper extends the Becker-Willis static microlevel fertility demand model to a dynamic macrolevel population growth model. Alternatively, the author's model can be viewed as a generalization of J. Laitner's stochastic income theory where no differential fertility is allowed. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1990
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