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Demographic Transition and Economic Welfare: The Role of In-Cash and In-Kind Transfers

Stephen Miller and Kyriakos Neanidis ()

No 2014-24, Working papers from University of Connecticut, Department of Economics

Abstract: Do in-cash and in-kind transfers to families affect parental fertility choices and economic welfare differently? We examine this question via a demographic transition channel in the context of a two-period overlapping generations model. In childhood, reproductive agents face a non-zero probability of death, while as adults, they allocate their time to work, leisure, and child rearing activities. Health status in adulthood exhibits "state dependence," as it depends on health in childhood. We find that cash transfers lead to both higher fertility and welfare if parents strongly value the quantity of their children. This positive welfare effect dominates an indirect negative welfare effect due to a lower growth rate. But, if parents value the quality of their children, in-kind transfers yield greater welfare, along with lower fertility and higher economic growth.

Keywords: fertility; health; growth; transfers; welfare (search for similar items in EconPapers)
JEL-codes: F35 F43 I12 O41 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2014-09
New Economics Papers: this item is included in nep-fdg and nep-gro
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Journal Article: Demographic transition and economic welfare: The role of in-cash and in-kind transfers (2015) Downloads
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