Industry and the family: Two engines of growth
Journal Article
We generalize the class of endogenous growth models in which the scale of the economy has level rather than growth effects, and study the implications of different demographic and technological factors when both fertility choice and research effort are endogenous. The model incorporates two dimensions of technological progress: vertical (quality of goods) and horizontal (variety of goods). Both dimensions contribute to productivity growth but are driven by different processes and hence respond differently to changes in fundamentals. Specifically, while unbounded vertical progress is feasible, the scale of the economy limits the variety of goods. Incorporating a linearity in reproduction generates steady-state population growth and variety expansion. We thus have two engines of growth generating dynamics that we compare with observed changes in demographics, market structure, and patterns of growth. Numerical solutions yield the important insight that, while endogenous, fertility responds very little to industrial policies. Demographic shocks, in contrast, have substantial effects on growth. © 2003 Kluwer Academic Publishers.
Full Text
Duke Authors
Cited Authors
- Connolly, M; Peretto, PF
Published Date
- March 1, 2003
Published In
Volume / Issue
- 8 / 1
Start / End Page
- 115 - 148
International Standard Serial Number (ISSN)
- 1381-4338
Digital Object Identifier (DOI)
- 10.1023/A:1022864901652
Citation Source
- Scopus