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Pareto-efficiency and endogenous fertility: a simple model

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  • Philippe Michel

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Bertrand Wigniolle

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This article is devoted to the study of the Pareto-efficiency of the competitive equilibrium for a simple overlapping generations economy with endogenous fertility. For CES utility and production functions, it is proved that the economic properties of the economy are closely related to the two elasticitiesof substitution. First, the competitive equilibrium exists and is unique if the sum of the two elasticities is not smaller than one. Secondly, a set of parameters is provided such that the equilibrium is both in under-accumulation and inefficient. Thirdly, a sufficient condition is proved that ensures that an equilibrium converging in under-accumulation is Pareto-efficient: the sum of the two elasticities must not be greater than two.

Suggested Citation

  • Philippe Michel & Bertrand Wigniolle, 2009. "Pareto-efficiency and endogenous fertility: a simple model," PSE-Ecole d'économie de Paris (Postprint) halshs-00306463, HAL.
    • Handle: RePEc:hal:pseptp:halshs-00306463
    DOI: 10.1080/08898480802619587
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00306463
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    References listed on IDEAS

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    1. Michel, Philippe & Pestieau, P, 1993. "Population Growth and Optimality: When Does Serendipity Hold?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(4), pages 353-362, November.
    2. Mikhail Golosov & Larry E. Jones & Michèle Tertilt, 2007. "Efficiency with Endogenous Population Growth," Econometrica, Econometric Society, vol. 75(4), pages 1039-1071, July.
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    9. J. Ignacio Conde-Ruiz & Eduardo L. Giménez & Mikel Pérez-Nievas, 2010. "Millian Efficiency with Endogenous Fertility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(1), pages 154-187.
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    Keywords

    endogenous fertility; Pareto-efficiency;

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