Endogenous Fluctuations in the Barro-Becker Theory of Fertility

Abstract

One of the recent interesting hypotheses of population growth is due to EASTERLIN (1973) (see also BECKER (1981) chapter 7) who suggests the possibility of self-generating fluctuations in population growth. A large population will face stiffer economic competition, lower incomes, congestions and crowding if other means of production as well as the social infrastructure do not expand simultaneously. The result may be a decline in fertility as parents try to maintain an adequate standard of living for themselves. But why should capital and other means of production or the social infrastructure not expand with population size at a uniform rate? Are fluctuations a necessary or even possible outcome of this analysis? Using the BARRO-BECKER framework (1985) and relaxing some of their assumptions, we will answer this question. Our results show that under a broad class of preferences, fertility and per capita incomes not only move together but endogenously oscillate.

We thank Sadao Kanaya for calling our attention to Barro and Becker’s work on the fertility choice problem. We are grateful to Gary Becker for valuable comments and corrections.