Theoretical approach to the inverse-J-shaped relationship of fertility and economic development

Abstract

In many common macroeconomic growth models, population increases at a fixed, exogenously given rate or the relationship between fertility and economic development is assumed to be negative. This thesis considers the recently discovered fertility rebound in countries with high levels of development and two overlapping generations models with endogenous fertility are discussed. Assuming two different types of labor and allowing for both occupation and fertility choice, Kimura and Yasui (2007) show that capital accumulation increases the income and the education level of an economy. Furthermore, fertility decreases with output per capita at low and medium levels of development, and stagnates at high levels of output per capita and education. Day (2015) extends the model of Kimura and Yasui (2007). She introduces purchased child rearing inputs and a production function for child rearing. This leads to an inverse J-shaped association between fertility and economic development. Moreover, it allows for different population growth rates across countries at the same stage of economic development.