Mortality Differential and Growth: What do we Learn From the Barro-Becker Model?

Abstract

The model of endogenous fertility by Barro and Becker (1989) is augmented by taking into account the heterogeneity of households in terms of capital endowments, mortality, and costs per surviving child. There exists a unique balanced growth path where the population growth rates of all dynasties are equal. An increase in mortality raises the time cost per surviving child, and enhances economic growth, while reducing parity and demographic growth. The mechanism rests on the quantity-quality trade-off of having children, summarized by the adjustment of the average rearing cost of a surviving child.

Keywords:

• endogenous fertility
• endogenous growth
• heterogeneous households
• mortality differential
• mortality shocks
• quantity-quality trade-off

ACKNOWLEDGMENTS

The authors thank two anonymous referees, Eleni Iliopoulos, the participants in the Journées Louis-André Gérard-Varet held in Marseille on June 2010, those in the Public Economic Theory Conference, held in Istanbul on June 2010, and those in the ASSET Conference, held in Alicante on October 2010, for their helpful comments. Usual disclaimers apply.