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Title: Growth and bubbles: Investing in human capital versus having children
Author: Raurich, Xavier
Seegmuller, Thomas
Keywords: Creixement humà
Anàlisi cost-benefici
Indicadors econòmics
Política familiar
Human growth
Cost effectiveness
Economic indicators
Family policy
Issue Date: May-2019
Publisher: Elsevier B.V.
Abstract: As it is documented, households' investment in their own education (human capital) is negatively related to the number of children individuals will have and requires some loans to be financed. We show that this contributes to explain episodes of bubbles associated to higher growth rates. This conclusion is obtained in an overlapping generations model where agents choose to invest in their own education and decide their number of children. A bubble is a liquid asset that can be used to finance either education or the cost of rearing children. The time cost of rearing children plays a key role in the analysis. If the time cost per child is sufficiently high, households have only a small number of children. Then, the bubble has a crowding-in effect because it is used to provide loans to finance investments in education. On the contrary, if the time cost per child is low enough, households have a large number of children. Then, the bubble is mainly used to finance the total cost of rearing children and has a crowding-out effect on investment. Therefore, the new mechanism we highlight shows that a bubble enhances growth if the economy is characterized by a high rearing time cost per child.
Note: Versió postprint del document publicat a:
It is part of: Journal of Mathematical Economics, 2019, vol. 82, num. May, p. 150-159
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ISSN: 0304-4068
Appears in Collections:Articles publicats en revistes (Economia)

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