Inequality and growth: Why differential fertility matters

David De La Croix*, Matthias Doepke

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

294 Scopus citations

Abstract

We develop a new theoretical link between inequality and growth. In our model, fertility and education decisions are interdependent. Poor parents decide to have many children and invest little in education. A mean-preserving spread in the income distribution increases the fertility differential between the rich and the poor, which implies that more weight gets placed on families who provide little education. Consequently, an increase in inequality lowers average education and, therefore, growth. We find that this fertility-differential effect accounts for most of the empirical relationship between inequality and growth.

Original languageEnglish (US)
Pages (from-to)1091-1113
Number of pages23
JournalAmerican Economic Review
Volume93
Issue number4
DOIs
StatePublished - Sep 2003

ASJC Scopus subject areas

  • Economics and Econometrics

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