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Intensive and Extensive Margins of Fertility, Capital Accumulation, and Economic Welfare

Akira Momota

No 917, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper investigates the impact of low fertility on long-term capital accumulation and economic welfare. We find that the impact differs according to whether the low fertility arises from a decrease in the intensive or extensive margin of fertility. We show that an increase in the intensive margin of fertility decreases the capital stock and economic welfare. Conversely, we identify a U-shaped relationship between the extensive margin of fertility and the capital stock because of the existence of two opposing effects, such that the decline in fertility may reduce economic welfare. Furthermore, we show that an intragenerational income redistribution policy can eliminate the welfare loss resulting from the incomplete market.

Keywords: Childlessness; Economic growth; Extensive margin of fertility; Income redistribution; Intensive margin of fertility; Overlapping generations. (search for similar items in EconPapers)
JEL-codes: H23 J13 O41 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2015-03
New Economics Papers: this item is included in nep-dge, nep-gro and nep-pbe
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Journal Article: Intensive and extensive margins of fertility, capital accumulation, and economic welfare (2016) Downloads
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