Population dynamics, intergenerational mobility, and the process of economic development

Abstract

This study analyzes the interactions between population dynamics with differential fertility the intergenerational mobility and economic development. Population dynamics with differential fertility exerts the following two effects on the economy: (i) the change in the population size of the entire economy influences the mobility through changing in the composition of workers and (ii) the decreasing/increasing transfer per child influences the mobility. A sufficient increase in the population growth increases the population size and leads to a significant decline in the transfers per child; this phenomenon contributes toward the cyclical behavior of mobility and income inequality. On the other hand, when a population growth decreases, the mobility monotonically approaches toward steady state. These results are consistent with some empirical evidence. Hence, this study demonstrates that the population dynamics with differential fertility leads to a difference in transitional dynamics of intergenerational mobility and the process of economic development.