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From Malthus to Modern Growth: Child Labor, Schooling and Human Capital

Edgar Vogel

No 08-42, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: This paper develops a dynamic general equilibrium model of fertility, human capital accumulation, child labor and uncertain child survival focusing on the qualitative and quantitative effect of declining mortality on household decisions and economic development. Due to uncertainty about child survival, parents have a precautionary demand for children. Rising survival probability leads to falling fertility, eventually to investment into schooling and the demise of child labor. Child labor can be an obstacle to development since it lowers the incentives of parents to educate children. Furthermore, the paper argues that the decline of precautionary child demand as a consequence of falling mortality is not sufficient to generate a demographic transition. Falling mortality can only explain a relatively small part of the fertility decline. A sizable reduction in fertility can only be achieved by human capital investment and the induced quantity-quality trade off.

Pages: 30 pages
Date: 2009-05-28
Note: I thank Andreas Irmen, Wolfgang Kuhle, Alexander Ludwig, Steffen Reinhold and participants of the CDSE and MEA Seminar for helpful comments. Financial support by the State of Baden-Württemberg, the German Insurers Association (GDV) and the German Science Foundation (DFG, SFB 504) is gratefully acknowledged. Please send comments and questions to Vogel.Edgar@utanet.at.
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