Optimal fertility along the life cycle

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Publication:2636852





The authors consider a 4-period overlapping generations model in which individuals are fertile for two periods. They show that the economy will portray cyclical dynamics if individuals delay childbirth from the first to the second fertile period. This cyclicality arises from the fact that with delayed fertility the size of the labor force fluctuates over time (see [\textit{A. Momota} and \textit{R. Horii}, ``Timing of childbirth, capital accumulation, and economic welfare, Oxford Econ. Pap. 65, No. 2, 494--522 (2013; \url{doi:10.1093/oep/gps027})] for a similar point). The innovation of the current paper lies in the fact that the authors are able to characterize the long-run social optimum and relate their analysis to Samuelson's Serendipity theorem. This theorem states that as long as a unique stationary equilibrium exists, the long-run social optimum can be reached if the optimal fertility rate can be imposed. The current authors show how this optimal fertility needs to be distributed over the two fertile periods such that the long-run social optimum can be reached.











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