Endogenous Fertility in Models of Growth

Abstract

Most theories of economic growth ignore determinants of growth in population. The common assumption of constant population growth is strikingly inconsistent with the data, which reveals a logistic pattern of population growth, the acceleration often coinciding with industrialization. After surveying existing theories of endogenous population, we propose a model in which the family replaces the market in a "traditional" sector. Children are both the primary source of labor and the sole means of saving in this sector, with output divided between generations via bargaining. Industrialization improves the opportunities of children outside the rural sector. It thus leads not only to higher outmigration, but also, by increasing children's bargaining power and hence their share of output, lowers the incentive to bear children. The model can thus explain observed changes in both overall population growth and its sectoral composition.