We re-examine the issue of optimal population in the basic overlapping generations model of neoclassical growth with endogenous fertility and time cost of children in both closed and small open economies. In the former case, we show that the golden rule of population growth can be achieved by a benevolent government in a market setting whose purpose is to maximize the steady-state individual lifetime welfare, using either a child subsidy or a child tax. In the latter case, the child subsidy (tax) can be used as an exclusive instrument to replicate the command optimum.
Family policies and the optimal population growth rate: closed and small open economies
GORI, LUCA
2010-01-01
Abstract
We re-examine the issue of optimal population in the basic overlapping generations model of neoclassical growth with endogenous fertility and time cost of children in both closed and small open economies. In the former case, we show that the golden rule of population growth can be achieved by a benevolent government in a market setting whose purpose is to maximize the steady-state individual lifetime welfare, using either a child subsidy or a child tax. In the latter case, the child subsidy (tax) can be used as an exclusive instrument to replicate the command optimum.
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