Altruism, Fertility and Risk

Juan Cordoba and Xiying Liu

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This paper studies fertility choices and fertility policies when children's earning abilities are random and parents are altruistic. We characterize equilibrium allocations arising in endowment economies with either complete or incomplete markets. Both models can replicate a number of empirical regularities, such as inequality, social mobility and fertility decreasing with ability, but the incomplete markets model provides a number of more plausible predictions. We find that fertility policies are generally welfare detrimental in our models even when fertility is inefficiently high.

Keywords: Idiosyncratic risk; Bewley model; Fertility; uninsurable risk; complete markets; incomplete markets (search for similar items in EconPapers)
JEL-codes: D11 D31 D51 D61 I3 J1 (search for similar items in EconPapers)
Date: 2014-04-05
New Economics Papers: this item is included in nep-dge and nep-ger
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Citations: View citations in EconPapers (4)

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Working Paper: Altruism, fertility and risk (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:37481

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