Document Type

Working Paper

Publication Date

4-5-2014

Working Paper Number

WP #14010, April 2014

Abstract

This paper studies fertility choices and fertility policies when children's earning abilities are random and parents are altruistic. We characterize equilibrium allocations arising in endowment economies with either complete or incomplete markets. Both models can replicate a number of empirical regularities, such as inequality, social mobility and fertility decreasing with ability, but the incomplete markets model provides a number of more plausible predictions. We find that fertility policies are generally welfare detrimental in our models even when fertility is inefficiently high.

JEL Classification

D11, D31, D51, D61, I3, J1

File Format

application/pdf

Length

53 pages

Included in

Economics Commons

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