Millian Efficiency with Endogenous Fertility

J. Ignacio Conde-Ruiz, Eduardo Giménez and Mikel Perez-Nievas ()
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Mikel Perez-Nievas: Universidade de Santiago de Compostela

No 37, Documentos de trabajo - Analise Economica from IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia

Abstract: This paper is concerned with an extension of the notion of Pareto efficiency, referred to as Millian efficiency, to evaluate the performance of symmetric allocations in an overlapping generations setting with endogenous fertility. The criterium of Pareto dominance underlying the notion of Millian efficiency is based exclusively on preferences of those agents who are actually born, and allows only for welfare comparisons of symmetric allocations (i.e, allocations in which all living individuals of the same generation take the same decisions). The main contributions of the paper are the following. First, we provide necessary (static) and sufficient (dynamic) conditions to determine whether an allocation is Millian efficient or not, and we show that the sufficient conditions for dynamic efficiency offered by Cass (1972) and Balasko and Shell (1980) cannot be straightforward applied when fertility decisions are endogenous. Second, we extend the two Fundamental Theorems of Welfare Economics to a framework with endogenous population by characterizing Millian efficient allocations as the equilibria of a decentralized price mechanism. Finally, we present a condition to identify equilibrium allocations as dynamically efficient that exclusively uses the sequence of prices associated to such decentralized equilibria.

Keywords: Endogenous fertility; Pareto optimality; Dynamic efficiency (search for similar items in EconPapers)
JEL-codes: D61 D91 H21 J13 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Review of Economic Studies, January 2010, pages 154-187

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Related works:
Journal Article: Millian Efficiency with Endogenous Fertility (2010)
Working Paper: Millian efficiency with endogenous fertility (2007)
Working Paper: Millian Efficiency with Endogenous Fertility
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Persistent link: https://EconPapers.repec.org/RePEc:edg:anecon:0037

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