Industry and the family: Two engines of growth

Journal Article (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