Life expectancy, fertility, and educational investment

In this study, we develop a model of overlapping generations where adults make decisions on consumption, fertility, and their personal education. We show that under the assumption of exogenous mortality, there are multiple steady states with club convergence occurring when mortality is sufficiently high. If mortality is sufficiently low, there will be a unique, stable steady state, and the economy will converge to a “good” steady state irrespective of where it starts from. Under the assumption of endogenous mortality with “threshold effects,” we find that club convergence will occur if the threshold is sufficiently high; conversely, a low threshold can help the economy to steer clear of the underdevelopment trap.