Inequality and Growth: Why Differential Fertility Matters
- 1 August 2003
- journal article
- Published by American Economic Association in American Economic Review
- Vol. 93 (4), 1091-1113
- https://doi.org/10.1257/000282803769206214
Abstract
We develop a new theoretical link between inequality and growth. In our model, fertility and education decisions are interdependent. Poor parents decide to have many children and invest little in education. A mean-preserving spread in the income distribution increases the fertility differential between the rich and the poor, which implies that more weight gets placed on families who provide little education. Consequently, an increase in inequality lowers average education and, therefore, growth. We find that this fertility-differential effect accounts for most of the empirical relationship between inequality and growth.Keywords
Other Versions
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