Optimal fertility under age-dependent labor productivity

Pierre Pestieau and Gregory Ponthiere

No 2015043, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In the so-called Rapport Sauvy (1962), the French demographer Alfred Sauvy argued that Wallonia’s fertility rate was socially suboptimal, and recommended a 20 % rise of fertility, on the grounds that a society with too low a fertility leads to a low-productive economy composed of old workers having old ideas. This paper examines how Sauvy’s intuition can be incorporated in the seminal Samuelsonian optimal fertility model (Samuelson 1975). For that purpose, we build a 4-period OLG model with physical capital and with two generations of workers (young and old), the skills of the latter being subject to some form of decay. We characterize the optimal fertility rate, and show that this equalizes, at the margin, the sum of the capital dilution effect (Solow effect) and the labor age-composition effect (Sauvy effect) with the intergenerational redistribution effect (Samuelson effect). Finally, we develop a numerical example, and examine how Sauvy’s recommendation can be reconcilied with facts.

Keywords: optimal fertility; age structure; overlapping generations; social optimum (search for similar items in EconPapers)
JEL-codes: E13 E21 H13 J24 (search for similar items in EconPapers)
Date: 2015-10-19
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://sites.uclouvain.be/core/publications/coredp/coredp2015.html (application/pdf)

Related works:
Journal Article: Optimal fertility under age-dependent labour productivity (2017)
Working Paper: Optimal fertility under age-dependent labour productivity (2017)
Working Paper: Optimal fertility under age-dependent labour productivity (2017)
Working Paper: Optimal fertility under age-dependent labour productivity (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2015043

Access Statistics for this paper

More papers in LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Alain GILLIS ().