The effect of interventions to reduce fertility on economic growth
Quamrul Ashraf, Brown University
Ashley Lester, Brown University
David N. Weil, Brown University
We analyze quantitatively the economic effects of interventions that reduce fertility in developing countries. We build up an answer to the macroeconomic question of how fertility changes affect economic output by starting with microeconomic evidence on how demographic factors affect household economic behavior. These microeconomic effects are then aggregated using simple economic theory and embedded in a dynamic model that follows changes in the demographic structure over time. Among the channels by which demographics affect the economy that we consider are pressure on fixed natural resources, changes in human capital accumulation, demand for physical capital, changes in the age structure of the labor force, and the interaction of age structure changes with life cycle saving. This micro-based approach represents an alternative to cross-country regressions that have frequently been used (incorrectly, in our view) to examine how fertility changes affect the economy.