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Direction of technical change, endogenous fertility, and patterns of growth

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  • Mehdi Senouci

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

Abstract

What type of technical progress is able to increase income per capita, instead of merely translating into higher fertility? To investigate this question, this paper first sets up an OLG growth model with capital, land and endogenous fertility. Children compete with capital as a means of saving for the young. This framework is then put into motion by continuous neutral and investment-specific technical change. Neutral technical change leads to well-known Malthusian dynamics and cannot make the wage rate grow asymptotically. On the contrary, investment technology alters the relative price of capital and children and so also affects the households' accumulation/fertility decisions. If capital and labor are strict substitutes in the production function, continuous investment-specific technical change results in long-term growth of per capita income. The theory is used to interpret some evidence on the first steps of the Industrial Revolution.

Suggested Citation

  • Mehdi Senouci, 2013. "Direction of technical change, endogenous fertility, and patterns of growth," Working Papers hal-01206021, HAL.
    • Handle: RePEc:hal:wpaper:hal-01206021
    Note: View the original document on HAL open archive server: https://hal.science/hal-01206021
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