Abstract
Traditional approaches to growth theory have modeled the process of growth as arising from decisions to invest in physical capital and from technological progress. This chapter discusses the implications of introducing technological progress and human capital into the Barro–Becker model of endogenous fertility. Harrod-neutral technical progress, apart from human capital, is incorporated into the analysis. One of the implications of technical progress is that steady states are no longer in levels; they represent growth paths of per capita variables like output and consumption on capital. The dynamic behavior of physical capital will be monotonic or oscillatory, depending on the elasticity of a certain altruism function that may also be viewed as the elasticity of an inverse demand curve for children. This elasticity, which is always equal to unity in the Barro–Becker model, also plays a major role in determining the existence of multiple steady states.
Published Version
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