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Neoclassical growth with endogenous age distribution. Poverty vs low-fertility traps as steady states of demographic transitions

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Abstract

Compared to other factors, the role of the age distribution of the population as a key endogenous determinant of economic growth trajectories has traditionally been overlooked. This is unrealistic, especially when dealing with major epochs of structural change, such as demographic transitions. We set up a model combining a simple representation of the economy, based on the neoclassical growth model of Solow, with a comprehensive representation of population dynamics. The model is used to investigate the structure of balanced growth states of the population and the economy in the presence of demographic transitions. The analysis shows that proper inclusion of age structure enriches the spectrum of the long-run equilibria of the neoclassical model, allowing up to five states of balanced growth, and shows the onset of “poverty” and “low-fertility” traps as different facets of fertility transitions. The role of different timing of fertility, mortality and savings transitions, and of more realistic demography of capital, is also considered.

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Notes

  1. From this viewpoint therefore our model belongs to the second approach described above. We thank an anonymous reviewer of the Journal for having helped us to better frame our approach within the current literature.

  2. In particular, this result allows to avoid the message that the very low population growth rates for λ→–d will correspond to a very favourable situation in terms of income. We thank an anonymous reviewer for having pointed out the crucial role of the endogeneity of capital demography in order to have a more realistic low-fertility trap equilibrium.

  3. Note that if we instead keep mortality and fertility rates dependent on per capita income tout-court, then the problem becomes a non-autonomous one due to the presence of an exponentially growing term in the arguments of vital rates, which makes it the problem intractable along our approach.

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Acknowledgements

The authors warmly thank two anonymous referees and an Editor of the journal whose indications allowed to sharply improve the structure and the exposition of the paper. PM thanks Luca Faustini for having made him aware of Zhao’s paper on Chinese fertility. Usual disclaimers apply.

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Authors and Affiliations

  1. Dipartimento di Scienze Economiche, Via Ridolfi 10, 56124, Pisa, Italy

    Luciano Fanti

  2. Dipartimento di Matematica, Università di Trento, Via Sommarive 14, 38050, Povo, Trento, Italy

    Mimmo Iannelli

  3. Dipartimento di Statistica e Matematica Applicata all’Economia, Via Ridolfi 10, 56124, Pisa, Italy

    Piero Manfredi

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  1. Luciano Fanti
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  2. Mimmo Iannelli
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  3. Piero Manfredi
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Correspondence to Piero Manfredi.

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Responsible editor: Alessandro Cigno

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Fanti, L., Iannelli, M. & Manfredi, P. Neoclassical growth with endogenous age distribution. Poverty vs low-fertility traps as steady states of demographic transitions. J Popul Econ 26, 1457–1484 (2013). https://doi.org/10.1007/s00148-012-0446-4

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  • DOI: https://doi.org/10.1007/s00148-012-0446-4

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