Abstract
AbstractRecent evidence on the “fertility rebound” offers credence to the idea that, from the onset of early industrialization to the present day, the dynamics of fertility can be represented by an N‐shaped curve. An overlapping generations model with parental investment in human capital can account for these observed movements in fertility rates during the different stages of demographic change. A demographic transition with declining fertility emerges at the intermediate stage, when parents engage on a child quantity–quality trade‐off. At later stages, however, the process of economic growth generates sufficient resources so that households can rear more children while still providing the desirable amount of education investment per child.
Highlights
The relation between economic growth and demographic change has been at the forefront of research on the economics of development for at least three decades.Motivated by recent evidence on a phase of demographic change that researchers have termed ‘fertility rebound’, this study is the first to develop a theory that offers a joint account for three empirically-observed phases of changes in fertility trends, during the various stages of the development process.Until recently, the conventional wisdom with regard to fertility dynamics seemed to favour the view that, from the onset of early industrialisation, population changes in Northern Europe and the Scandinavian Peninsula can be categorised into two distinct stages
We develop a theory in which the fertility rebound emerges naturally as the final phase of a 3-stage process of demographic change and economic development, within an overlapping generations model in which households have preferences over the number of children they rear, and the human capital of each of their offspring
Recent empirical evidence suggests that many of the countries that witnessed marked reductions in their fertility since the onset of demographic transition, appear to experience a fertility rebound with rising fertility rates
Summary
The relation between economic growth and demographic change has been at the forefront of research on the economics of development for at least three decades. The mechanisms suggested by our paper have an immediate policy implication: Given that the fertility rebound is an inherent part of the development process, heralding a shift to a positive relation between GDP per capita and the fertility rate, growth-promoting policies, in general, can complement more targeted ones in mitigating the problem and the repercussions of population ageing.[8] it is worth reemphasising that the literature is missing a theoretical foundation for the recent reversal in the TFRs of various Western countries, despite this being documented as a stylised demographic finding by several researchers (e.g. Goldstein et al 2009; Myrskylä et al 2009; Bongaarts and Sobotka 2012; Luci-Greulich and Théveron 2014; Dominiak et al 2014). This may have restrained the increase in TFRs across the Westerm world
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