Population growth overshooting and trade in developing countries |
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Authors: | Ulla Lehmijoki Tapio Palokangas |
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Institution: | (1) University of Helsinki and HECER, P.O. Box 17, Arkadiankatu 7, 00014 Helsinki, Finland;(2) University of Helsinki, HECER and IZA, P.O. Box 17, Arkadiankatu 7, 00014 Helsinki, Finland |
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Abstract: | This paper examines a developing economy using a family-optimization model in which the number of children is a normal good.
Trade liberalization generates two effects: the income effect that increases population growth and the gender wage effect
that, in the short run, increases, but, in the long run, decreases population growth. With higher income, families invest
more in capital if the status of the capital is significant. Because female labor is complementary to capital, higher investment
increases the relative wages of women and attracts them from child rearing into production. Ultimately, the population growth
falls below the original level.
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Keywords: | Population growth International trade |
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