Research -
Growth and Demographic Change
Michele
Boldrin
Forthcoming:
The Two Transitions, Demographic
and Industrial
with Aubhik Khan and Larry E. Jones
Mortality, Fertility, and
Intergenerational Transfers: A Long Run Perspective
with Larry E. Jones
From Busts to Booms in Babies and
Goodies NEW!
with Larry E. Jones and
Alice Schoonbroodt
PDF File
After the fall
in fertility during the Demographic Transition, many developed countries
experienced a baby bust, followed by the Baby Boom and subsequently a
return to low fertility. Received wisdom from the Demography literature
links these large fluctuations in fertility to the series of Economics
’shocks’ that occurred with similar timing — the Great Depression,
WWII, the economic expansion that followed and then the productivity
slow down of the 1970’s. To economists, this line of argument suggests
a more general link between fluctuations in output and fertility
decisions, of which the Baby Bust-Boom-Bust event (BBB) is a
particularly stark example. Surprisingly, little has been done to
formally address this link in a stochastic model of optimal fertility
choice. This paper is an attempt to formalize the conventional wisdom in
simple versions of stochastic growth models with endogenous fertility.
First, we develop initial tools to address the effects of ”temporary”
shocks to productivity on fertility choices. Second, we analyze
calibrated versions of these models. We can then answer several
qualitative and quantitative questions: Under what conditions is
fertility pro- or countercyclical? How large are these effects and how
is this related to the ’persistence’ of the shocks? How much of the BBB
can be accounted for by the kinds of medium run productivityfluctuations
described as computed from the data?
Three Equations Generating an
Industrial Revolution? NEW!
With Aubhik Khan and
Larry E. Jones
PDF
File
In this paper
we evaluate quantitatively the relationship between economic and
demographic growth. We use simple models of endogenous growth, featuring
human capital investment at the
individual level in conjunction with either of two models of fertility
choice, the B&B dynastic motive, and the B&J lateage-security
motive. We find that exogenous improvements in agespecific survival
probabilities, lead to increases in the rate of return to human capital
investment. This, in turn, engenders an increase in the growth rate of
output per capita much like what is typically seen when countries go
through industrialization. In the models implemented so far, we also
find that this is accompanied either by a permanent increase in the
growth rate of population (for the B&B), or by too much late age
consumption and a rate of return on capital that is too high relative
to available data (for the B&J). Historical records show that the
increase in the growth rate of population during the takeoff was
temporary, and that the transition eventually lead to a stationary
population; it is unclear if a different version of the B&B model
can be built that generates this crucial stylized facts. On the other
hand, preliminary work shows that more realistic variations of the
B&J model should eliminate the unrealistic predictions about old
age consumption and rate of return on capital while maintaining the
ability of the model to generate an IR and a DT.
Public Education and
Capital Accumulation NEW!
Research
in Economics 59 (2005), 85-109
PDF File
I
study an overlapping generations model where physical and human capitals
are inputs of production that can be accumulated by withholding
resources from current consumption. Human capital is the output of a
schooling system which can be financed either by private expenditures,
or by taxes, or by a combination of both. In a political equilibrium
with majority voting, public school financing turns out to be an
instrument to solve a ``free rider problem''. By improving the skills
of next period's workers it increases the expected return on physical
capital, something which cannot be achieved by means of private
expenditure in education only. When financed by a uniform income tax,
public schools are also an instrument for intergenerational
redistribution. Depending on initial conditions, the model predicts
either a poverty trap (poor societies invest too little in education) or
persistent growth driven by the accumulation of human capital. The
introduction of public financed education shrinks the set of initial
conditions leading to the poverty trap. I characterize the global
dynamics of the model, which delivers a number of testable hypotheses on
the relation between income growth, capital accumulation and the
development of public education. All throughout the paper I concentrate
on specific functional forms allowing for a closed form solution,
nevertheless, all the important results carry over to fairly general
utility and production functions.
Fertility and Social Security NEW!
with Larry E. Jones and
Maria Cristina DeNardi. First version October 2003, this version March
2005.
PDF
File
The data show that an increase in
government provided old-age pensions is strongly correlated with a
reduction in fertility. What type of model is consistent with this
finding? We explore this question using two models of fertility, the one
by Barro and Becker (1989), and the one inspired by Caldwell and
developed by Boldrin and Jones (2002). In the Barro and Becker model
parents have children because they perceive their children's lives as a
continuation of their own. In the Boldrin and Jones' framework parents
procreate because the children care about their old parents' utility,
and thus provide them with old age transfers. The effect of increases in
government provided pensions on fertility in the Barro and Becker model
is very small, and inconsistent with the empirical findings. The effect
on fertility in the Boldrin and Jones model is sizeable and accounts for
between 55 and 65\% of the observed Europe-US fertility differences both
across countries and across time and over 80\% of the observed variation
seen in a broad cross-section of countries. Another key factor
affecting fertility the Boldrin and Jones model is the access to capital
markets, which can account for the other half of the observed change in
fertility in developed countries over the last 70 years.
Mortality, Fertility and
Saving in a Malthusian Economy
with Larry E. Jones
Review of Economic Dynamics 5
(2002), 775-814.
PDF
file
In this paper, we
develop and analyze a simple model of fertility choice by utility
maximizing households. Following the work of Barro and Becker, our model
is based on an explicit notion of intergenerational external effects.
In contrast to the Barro and Becker model however, we assume that the
external effects run from children to parents. That is, parents
consumption when old directly enters the utility function of the
children. This gives rise to a fundamentally different reason for
bearing of children. This is that parents expect to be cared for, at
least partially, by their children in their old age when their labor
productivity is low. Thus, children are an investment in own old age
consumption from the point of view of parents. We take infant mortality
rates as the key exogenous variable and endogeneize the size of the
transfer from children to parents by linking it to the endogenous
savings and fertility choice of the parents. This generates a simple
dynamic model of economic growth and of fertility transition that
performs better, qualitatively and quantitatively,
than previous models of which we are aware.
Chaotic Equilibrium Dynamics in Endogenous Growth
Models
with K. Nishimura, T.
Shigoka and M. Yano
Journal of Economic Theory, 96 (2001), 97-132
PDF file Figures: 1, 2, 3, 4, 5, 6, 7
We study a class of two-sector
endogenous growth models in the presence of a positive
external effect. The class of models exhibits global
indeterminacy of equilibria. The qualitative properties of a set of
examples are analyzed by means of analytical and numerical methods. We
also construct robust examples of both topological and ergodic chaos.
Growth
Cycles and Market Crashes
with David K. Levine
Journal of Economic Theory, 96 (2001), 13-39.
PDF file
Stock
market booms are often followed by dramatic falls. This is often
viewed as a bad thing, and evidence of investor irrationality.
To explain this from a fundamentalist point of view requires
an asymmetry in the underlying technology shocks driving the market.
Here we argue that a straightforward model of technological progress
leads to clear asymmetries and these asymmetries may be also the source
of growth cycles. In a simple optimization model with a representative
consumer, if traders are not too risk averse, we show that the stock
market will generally rise, punctuated by occasional dramatic falls.
This is first best. Surprisingly, if consumers are very risk averse, the
gradual rise in the market will be broken by dramatic increases in
stock prices on the occasion of bad news. Bad news do not correspond to
a contraction of the production possibility set but, rather, to a
decrease in the rate at it expands. For this reason, this economy
provides a model of endogenous growth in which the timing of recoveries
and recessions is dictated by the pace at which technological
innovations are adopted.
Growth
Under Perfect Competition
with David K. Levine
mimeo. First version: October 1997; this
version June 2005.
PDF file
We construct an abstract,
dynamic general equilibrium model of innovation and growth, in the
spirit of Schumpeter's Theory of Theory of Economic Development.
Despite the existence of infinitely many commodities and activities,
the use of which may vary over time, we give a characterization of
equilibrium using the standard first and second welfare theorems, and
a standard transversality condition. We consider a series of examples
characterizing the dynamic properties of equilibria and show that many
results discussed in the "endogenous growth" literature can be
obtained as special cases of the model we propose. Next we study the
role of initial conditions in the process of economic growth and show
that most kinds of "path dependence" discussed in the literature may
arise under conditions of perfect competition and in the absence of
any external effect.
