title: Declining fertility and economic well-being: do education and health ride to the rescue?
abstract: It is widely argued that declining fertility slows the pace of economic growth in industrialized countries through its negative effect on labor supply. There are, however, theoretical arguments suggesting that the effect of falling fertility oneffectivelabor supply can be offset by associated behavioral changes. We formalize these arguments by setting forth a dynamic consumer optimization model that incorporates endogenous fertility as well as endogenous education and health investments. The model shows that a fertility decline induces higher education and health investments that are able to compensate for declining fertility under certain circumstances. We assess the theoretical implications by investigating panel data for 118 countries over the period 1980 to 2005 and show that behavioral changes partly mitigate the negative impact of declining fertility on effective labor supply.
authors.affiliation: Harvard University Center for Population and Development Studies 9 Bow Street Cambridge, MA 02138, USA.
authors.forename: Klaus
authors.initials: K
authors.lastname: Prettner
authors.affiliation: Harvard University School of Public Health 665 Huntington Avenue Boston, Massachusetts 02115, USA.
authors.forename: David E
authors.initials: DE
authors.lastname: Bloom
authors.affiliation: University of Hannover Wirtschaftswissenschaftliche Fakultät Königsworther Platz 1 30167 Hannover, Germany.
authors.forename: Holger
authors.initials: H
authors.lastname: Strulik
keywords: demographic change; economic growth; effective labor supply; human capital; population health