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Declining fertility and economic well-being: do education and health ride to the rescue?

Klaus Prettner (), David Bloom and Holger Strulik ()

PGDA Working Papers from Program on the Global Demography of Aging

Abstract: It is widely argued that declining fertility slows the pace of economic growth through its negative effect on labor supply. There are, however, theoretical arguments suggesting that the effect of falling fertility on effective labor supply can be offset by the associated behavioral changes. We formalize these arguments by setting forth a dynamic consumer optimization model that incorporates endogenous fertility as well as endogenous educational and health investments. The model shows that a fertility decline induces higher education and health investments that are able to compensate for declining fertility under certain circumstances. We assess the theoretical implications by investigating panel data for 118 countries over the period 1980 to 2005 and show that behavioral changes partly mitigate the negative impact of declining fertility on effective labor supply.

Keywords: demographic change; effective labor supply; human capital; population health; economic growth (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dem, nep-hea and nep-lab
Date: 2012-01
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Related works:
Journal Article: Declining fertility and economic well-being: Do education and health ride to the rescue? (2013) Downloads
Working Paper: Declining Fertility and Economic Well-Being: Do Education and Health Ride to the Rescue? (2012) Downloads
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