Growth and inequality: a demographic explanation

Abstract

This paper investigates the relationship between growth and inequality from a demographic point of view. In an extended model of the accidental bequest with endogenous fertility, we analyze the effects of a decrease in the old-age mortality rate on the equilibrium growth rate as well as on the income distribution. We show that the relationship between growth and inequality is at first positive and then may be negative in the process of population aging. The results are consistent with the empirical evidence in some developed countries.JEL Classification: D31, J13, O41

Population aging and endogenous economic growth

“…Furthermore, we endogenize fertility decisions of individuals in the sense that their utility increases in the number of children they have, while raising children requires parents to forego consumption (cf. Barro and Becker 1989; Sato and Yamamoto 2005; Miyazawa 2006). 4 The fertility decisions of individuals allow for population growth, population stagnation and population decline, depending on the level of mortality.…”

“…In so doing, we assume that individuals do not live forever but that they have to face a certain probability of death at each instant. Furthermore, we allow for endogenous fertility choices inspired by Barro and Becker (1989), Sato and Yamamoto (2005), and Miyazawa (2006), where parents want to have children, while they also face the associated costs in terms of foregone consumption. The standard endogenous and semi-endogenous growth models are then special cases of our framework with the probability of death being equal to zero and fertility being exogenously given.…”

“…6For an interesting study on the effects of accidental bequests on inequality and growth, see Miyazawa (2006). …”

Efectos de los ingresos del hogar, educación de la mujer y participación laboral femenina sobre la fecundidad ecuatoriana

“…De hecho, esto parece estar relacionado con el nivel de crecimiento económico del país (Strulik y Vollmer, 2015). El crecimiento puede estar positivamente relacionado con la desigualdad, pero luego puede ser negativo debido al envejecimiento generalizado de la población (Miyazawa, 2006). Por otro lado, Lai (2012) demuestra que existe un beneficio directo entre los niños y los costos financieros que conlleva su crianza.…”

Will China's demographic transition exacerbate its income inequality?–CGE modeling with top-down microsimulation

“…Their results show that half of the rapid increase in economywide consumption inequality during the 1980s was caused by population aging. Miyazawa's (2006) analytical results reveal that the population's aging enlarges the inequality between different generations and inequality within a generation and finally expands total inequality. Lan, Wei, and Wu's (2014) empirical study uses a panel dataset from 76 countries and regions from 1970 and 2011 and finds that the population's aging does increase income inequality significantly.…”