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Fertility and regulated wages in an OLG model of neoclassical growth: Pensions and old age support

Luciano Fanti () and Luca Gori ()

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: Since little attention has been paid to the effects of the regulation of wages on individuals' fertility choice, this paper investigates such effects within a standard OLG model of neoclassical growth. Some new results, so far escaped closer scrutiny by the increasing literature investigating economic growth and fertility, and which may have interesting policy implications, emerge: introducing minimum wages may, under suitable conditions, (1) have a favourable impact on the long-run outcomes of the economy; and (2) reduce the population growth rate. This occurs more likely when both sufficiently high capital's weight in technology and unemployment benefits do exist. Interestingly, these results are robust to different extensions introducing pensions and intra-family transfers. Therefore, to the extent that the absence of unions and of any regulation of wages are related with low wages, and the weight of capital in the distribution is increasing, the findings of this work also offer some policy implications which are, especially for developing countries in which the population growth may be too high, very interesting.

Keywords: Minimum wage; Unemployment; Endogenous fertility (search for similar items in EconPapers)
JEL-codes: E24 J13 O41 (search for similar items in EconPapers)
Date: 2008-01-01
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Note: ISSN 2039-1854
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Handle: RePEc:pie:dsedps:2008/70