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Institutet för Framtidsstudier - Institute for Futures Studies Arbetsrapport, Institutet för Framtidsstudier - Institute for Futures Studies

No 2008:11:
Low fertility and long run growth in an economy with a large public sector

Jovan Zamac (), Daniel Hallberg () and Thomas Lindh ()

Abstract: There is plenty of evidence that growth has a negative relation to fertility and dependency ratios. Recently it has been suggested that low fertility countries may be caught in a trap that is hard to get out of. One important mechanism in such a trap would be social interaction and its effect on the ideal family size. Such social interaction mechanisms are hard to capture in formal models, therefore we use an agent based simulation model to investigate the issue. In our experimental setup a stable growth and population path is provoked into a fertility trap by rising relative child costs linked to positive growth. Even rather large increases in child benefits are then insufficient to get out of the trap. However, the small number of children temporarily enables the economy to grow faster for several decades. Removing the adaptation of social norms turns out to disarm the trap.

Keywords: low fertility trap; social norms relative income; economic growth; (follow links to similar papers)

JEL-Codes: J12; J13; (follow links to similar papers)

35 pages, October 2008

ISSN: 1652-120X; ISBN: 978-91-85619-35-1

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This paper is published as:
Zamac, Jovan, Daniel Hallberg and Thomas Lindh, (2010), 'Low fertility and long run growth in an economy with a large public sector', European Journal of Population, Vol. 26, No. 2, pages 183-205



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