Private versus public financing of education and endogenous growth: A comment on Bräuninger and Vidal

This note shows that the long-run effect in the case of a low skill trap in Br?uninger and Vidal (Journal of Population Economics (2000) 13:387–401) contains a mistake. While not affecting the paper's basic intuition, this implies that the discussion in the short-run analysis also applies in the long-run. Received: 24 April 2001/Accepted: 9 June 2001 I wish to thank Alessandro Cigno and an anonymous referee for useful comments. Responsible editor: Alessandro Cigno.     

Pay-as-you-go financed public pensions in a model of endogenous growth and fertility

Employing an overlapping generations endogenous growth model in which parents derive utility from having children and, additionally, expect children to support them in old age, this paper explores the interrelation between growth, fertility, and the size of pay-as-you-go financed public pensions. It is shown that small sized public pensions stimulate per capita income growth, but further increases in public pensions eventually reduce it. Fertility, on the other hand, falls by an increase in public pensions if they are either small or large. Medium sized public pensions, however, may stimulate fertility. Received: 9 September 1997 / Accepted: 10 April 1998     

Education funding and regional convergence

The aim of this paper is to discuss the process of regional convergence within the framework of an overlapping generations model in which the engine of growth is the accumulation of human capital. In particular, we consider different education funding systems and compare their performance in terms of growth rates and pace of convergence between two heterogeneous regions. The analysis suggests that the choice of a particular education system incorporates a possible trade-off between long run growth rate and short run convergence. In such choice, the initial capital stock and the extent of regional human capital discrepancy appear as central variables. Received: 27 January 1999/Accepted: 16 April 1999     

A model of endogenous divorce and endogenous fertility

This paper examines the interaction between decisions on divorce and fertility. The analysis generates two major implications. Firstly, it complements the existing literature on endogenous fertility to explain why population growth and economic growth can be negatively correlated after an economy develops to a certain level. Secondly, it indicates that economic development leads to a simultaneous increase in divorce rates and decrease in fertility rates. Received: 05 February 1999/Accepted: 20 December 1999     

Population growth and social security financing

By allowing the population growth to be flexible, this paper analyzes the effect of a tax reform that involves an introduction of consumption taxation for social security financing. It is found that population growth and labor supply play an important role in determining the effect of the tax reform. If population growth and labor supply are exogenous, then an introduction of a consumption tax for social security financing, with the payroll tax rate being endogenous, decreases the interest rate and increases capital accumulation. However, if population growth and labor supply are endogenous, then an introduction of a consumption tax for social security financing increases the interest rate and reduces capital accumulation. Received: 26 February 2001/Accepted: 26 August 2001     

Immigration,assimilation and growth

This paper analyzes the welfare effects of immigration and its subsequent effect on ethnic diversity in a model featuring human capital spillovers which depend on the degree of ethnic heterogeneity, variation rates of time preference across individuals and endogenous levels of immigration and assimilation. In the model, an increase in ethnic diversity reduces the spillovers effect for the majority. Nonetheless, immigration can be welfare improving for the majority ethnic group even if it increases the degree of diversity as long as it raises the average human capital level and/or growth rate by increasing the proportion of people with low rates of time preference. However, if an economy is too homogenous, it will not be able to attract immigrants. Finally, if the level of immigration is not too high, then immigration also raises the net benefits to assimilation which leads to a more homogenous economy. Received: 18 February 1997 / Accepted: 16 July 1997     

Migration as a source of growth: The perspective of a developing country

This paper analyses the dynamics of migratory flows and growth in a developing economy. We show that when workers freely choose their location, some natives can rationally decide to return to their home country after they have accumulated a certain amount of knowledge abroad, while some prefer to stay permanently in the same economy (either at home or abroad). We point out that worker mobility can have an expansionary effect on the developing economy. Moreover, we show that in the long-run, as the sending economy develops, fewer natives are likely to emigrate and more migrants are likely to return. Received: 7 December 2000/Accepted: 25 April 2001     

Labor immigration and long-run welfare in a growth model with heterogenous agents and endogenous labor supply

This paper examines the consequences of labor immigration in an OLG economy in which agents have an elastic labor supply and differ with respect to degrees of altruism and rates of time preference. It focuses on three substantive questions. First, how do immigrants influence the bequest motive of altruistic natives? Second, what impact do immigrants have on the labor supply of natives? Finally, how does immigration affect the long-run welfare of both altruistic and non altruistic natives? Received: 25 November 1999/Accepted: 07 April 2000     

Time preference and capital mobility in an OLG model with land

This paper examines the pattern of capital mobility in a two-country overlapping generations world in which production uses three inputs: capital, labor and land. The steady-state welfare consequences of opening countries to financial capital or labor mobility are then compared. In particular, it is shown that capital mobility does not equalize standards of living across countries. To achieve this goal, one has to rely on labor mobility. Received: 8 January 1996 / Accepted: 6 June 1996     

Learning-by-doing,population pressure,and the theory of demographic transition

The present paper discusses the long-run effects of two interdependent relations between economic and population growth. According to a frequently used formulation of the population-push hypothesis, learning-by-doing effects in production lead to increasing returns to scale and, therefore, to a positive correlation between economic and population growth. In accordance to the theory of demographic transition the population growth rate initially increases with rising income levels and then declines. Regarding this relationship, the existence and stability of a low-income equilibrium and a high-income equilibrium will be shown in a neoclassical growth model. Under plausible conditions a demo-economic transition from the first to the second steady-state takes place. The result yields a meaningful interpretation of the population-push hypothesis, which is consistent with the empirical findings on the correlation between economic and population growth. Received March 8, 1996 / Accepted October 24, 1996     

The effects of development on migration: Theoretical issues and new empirical evidence

Empirical research on the determinants of emigration from the LDCs has so far given little emphasis to the complex relationship of development and migration. Since the beginning of the 1990s several arguments have been put forth which hint at the possibility that in the early stages of development economic progress might lead to more migration, even if income differentials to the potential destination regions decrease. This paper presents these arguments and tests them for the case of migration to Germany from 86 Asian and African countries from 1981 to 1995. The results confirm the importance of financial restrictions on migration, migration networks, and changes in the societal structure of the sending countries as well as the existence of a home preference. The estimations also control for the political situation in the home countries and for institutional measures in the host country. Received: 18 May 1998/Accepted: 6 March 2000     

From stagnation to growth: Revisiting three historical regimes

This paper explores the role of mortality in the long transition from Malthusian stagnation to sustained economic growth. An endogenous child mortality rate that varies inversely with parents standard of living is added to the framework in Galor and Weil (AER 2000). In our version of the model, the transition from stagnation to growth, triggered by an exogenous shock to technology, comprises a mortality revolution succeeded by a demographic transition.This paper has benefitted from discussions with and suggestions made by KarlGunnar Persson, Christian Schultz, and, particularly, Christian Groth at the University of Copenhagen. I gratefully acknowledge the insightful criticisms of two anonymous referees, and I thank Paula Madsen for English proof-reading. Responsible editor: Alessandro Cigno.     

Fertility,growth and the financing of public education and health

This paper considers the implications of the financing of government services to children when fertility decisions are endogenously determined. In particular, it is shown that when the services are financed by taxation, the equilibrium outcome is biased away from the socially preferred result. The bias results in higher fertility rates and lower economic growth rates than the efficient social optimum. This arises because each household internalizes the benefits, but not the costs of the tax-financed services. We consider alternative methods of financing the public provision of services and find that a combination of taxation and vouchers can eliminate the bias in the equilibrium outcome.We are grateful for comments from Alessandro Cigno and two anonymous referees.     

Age structure effects and growth in the OECD, 1950–1990

Economic growth depends on human resources and human needs. The demographic age structure shapes both of these factors. We study five-year data from the OECD countries 1950–1990 in the framework of an age structure augmented neoclassical growth model with gradual technical adjustment. The model performs well in both pooled and panel estimations. The growth patterns of GDP per worker (labor productivity) in the OECD countries are to a large extent explained by age structure changes. The 50–64 age group has a positive influence, and the group above 65 contributes negatively, while younger age groups have ambiguous effects. However, the mechanism behind these age effects is not yet resolved. Received: 16 January 1997/Accepted: 2 July 1998     

Pareto improving transition from a pay-as-you-go to a fully funded pension system in a model of endogenous growth

In this paper we investigate the possibility of Pareto improving social security reforms within a framework of endogenous growth. Belan et al. (1998) propose a transition from a pay-as-you-go (PAYG) pension system to a system of savings–subsidization. We follow this approach and prove that a Pareto improving conversion from the PAYG system to a fully funded one is possible. Finally, we compare the subsidy system with the fully funded system and discuss the problem of implementing the transition to the fully funded system. Received: 07 March 1999/Accepted: 13 December 1999     

Fertility decisions when infant survival is endogenous

There is evidence that fertility is positively correlated with infant mortality, and that a child‘s chance of surviving to maturity increases with the level of nutrition, medical care, etc. received in the early stages of life. By modelling parental decisions as a problem of choice under uncertainty, the paper shows that fertility and infant mortality are most likely to move in opposite directions if, as implicitly assumed by existing economic theories, parents believe that there is nothing they can do to improve the survival chances of their own children. By contrast, if parents realize that those chances improve with the amount they spend for the health, nutrition, etc. of each child that they put into the world, then fertility and infant mortality may move in the same direction. Under such an assumption, the model has the strong policy implication that directly death-reducing public expenditures are most effective, but stimulate population growth, at low levels of development. By contrast, at high levels of development, such expenditures tend to crowd out parental expenditures, and are a factor in fertility decline. Received: 14 October 1996 / Accepted: 28 July 1997     

Malthus in state space: Macro economic-demographic relations in English history, 1540 to 1870

. The history of preindustrial Europe provides an opportunity to examine the causes and consequences of population change at a macro level. However, serious statistical problems arise from the endogeneity of all observed variables in a Malthusian system (fertility, mortality, population size, and real wages), and from unobserved influences such as shifts in the demand for labor and variations in health. These problems have undermined both informal inference from the data and more complex econometric investigations. This paper takes a new statistical approach, finding the maximum likelihood estimate of a state space representation of the Malthusian system by repeated application of Kalman filter methods, using annual data from England, 1540 to 1870. The new estimates confirm some findings of the earlier literature and contradict others. Some variables are estimated for the first time. Implications are discussed for the interpretation of English economic-demographic history. Received: 3 January 2000/Accepted: 22 January 2001     

Altruism and the macroeconomic effects of demographic changes

In this paper we show that the macroeconomic effects of demographic changes strongly depend on the degree of altruism and on the specification of the intertemporal utility function. We allow for agents either to be altruistic in the sense of Barro (1974) or non-altruistic. In the latter case, generations are heterogeneous like in the „unloved children” model of Weil (1989). In the former case, where the model is a standard Ramsey model with identical agents, we distinguish a Millian and a Benthamite intertemporal utility function. For each of these models, we study the effects of an anticipated and unanticipated permanent decline in population growth as well as the consequences of a baby-boom/baby-bust scenario. Received April 17, 1996/Accepted December 10, 1996     

Immigration and the public sector: Income effects for the native population in Sweden

The immigrants' age structure and labour market situation are major determinants for their net contribution to the public sector. During the 50s, 60s and the 70s the immigrants' net contributions gave positive income effects for the native Swedes. Nowadays there are negative income effects due to the deteriorating employment situation among the immigrants. The yearly positive or negative income effects have at most been 1–2% of the gross national product. A change in the immigrants' employment rate by 1 percentage unit will change their yearly net contribution to the public sector by 0.1% of the gross national product. Received: 2 February 1996/Accepted: 28 July 1998     

Altruism and international labour migration

This paper investigates the effect of altruism on the pattern of labour migration in a two-country overlapping generations model. We show that differences in degrees of altruism across countries lead to bilateral migration flows. Starting from the autarkic steady-state equilibrium, restrictions on labour migration are relaxed. In temporary post-migration equilibrium factor prices are equal across countries. We then characterize the unique stable steady-state equilibrium: both countries are populated and this equilibrium is not a Pareto improvement. Some individuals prefer to live in autarky, others in an integrated world economy. Received: 6 July 1998/Accepted: 11 February 1999