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Differential fertility and intergenerational mobility under private versus public education

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Abstract

We study differential fertility and intergenerational mobility in an overlapping-generations framework with skilled and unskilled individuals. Assuming unskilled parents are less productive in educating children, we show that they choose higher fertility but less investment for child education than skilled parents. Public education reduces the fertility gap but may increase intergenerational mobility under certain conditions. We also find very different responses of fertility differential and intergenerational mobility to a variation in a preference or technology parameter. As the ratio of skilled to working population rises towards its steady state, average income rises, average fertility falls, but income inequality first rises and then falls.

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Notes

  1. A very partial list of this literature includes, for example, Becker and Tomes (1979), Loury (1981), Piketty (1995), Galor and Tsiddon (1997), Owen and Weil (1998), Iyigun (1999), Maoz and Moav (1999), Mookherjee and Ray (2003), Davies et al. (2005), Cremer and Pestieau (2006), and Docquier et al. (2007). Moreover, see Piketty (2000) for a survey of this literature.

  2. This literature includes, among others, Glomm and Ravikumar (1992), Zhang (1996), Epple and Romano (1998), Hassler and Mora (2000), Fernandez and Rogerson (2003), de la Croix and Doepke (2004), Davies et al. (2005), and de la Croix and Doepke (2009).

  3. There is already a large literature on “endogenous fertility,” which explains the negative correlation between parental education (or income) and fertility from different angles. The model developed in this section is most closely related to and different from de la Croix and Doepke (2004). Our model implies a negative correlation between parental education and fertility under both private and public educational systems, while their model implies the same fertility for all individuals, skilled or unskilled alike, under public education in which everyone receives the same amount of educational expenditure.

  4. For example, see Galor and Weil (2000), Galor and Galor and Moav (2002, 2004, 2006), de la Croix and Doepke (2003), and Varvarigos and Zakaria (2012).

  5. Making this assumption is a simple yet relevant way to capture the stylized fact that better educated parents spend more time in the education of each child according to the empirical evidence in the literature of both sociology and economics (e.g., Ballantine 2001, Weinberg 2001, and Ramey and Ramey 2010).

  6. The wage rates can be conveniently endogenized in a small open economy framework (e.g., Galor and Zeira 1993 and Hazan and Berdugo 2002).

  7. The importance of family background, and particularly of parental academic achievements and human capital, for an individual’s educational attainment has been consistently confirmed in the empirical literature; see Becker (1991) and de la Croix and Michel (2002) for useful surveys, and a more recent empirical study by Anger and Heineck (2010).

  8. See, e.g., Cremer et al. (2006), Mookherjee and Napel (2007), and Fan and Stark (2008).

  9. For some related existing models, see Galor and Tsiddon (1996) and the literature surveyed wherein. In those articles, yet, the economic forces underlying the result resembling the Kuznets curve are different from the one in action here. Specifically, in the previous literature, the curve emerges because of technological progress, which is not the case here.

  10. A further comment is that this result may be related to our simplifying assumption that public education cannot be complemented by private investment. The results may be modified if this assumption is relaxed, and de la Croix and Doepke (2009) provide a framework for such a possible extension.

  11. Note that in this paper, the wage rates for skilled and unskilled are fixed. Thus, both the average output and the average utility only depend on the proportion of skilled individuals.

  12. In this section, for simplicity, we do not conduct the analysis of social welfare, which would be qualitatively similar to that in Section 6.

  13. See, for example, Solon (2002) for a survey of the empirical literature of intergenerational mobility. Booth and Kee (2009), Lindquist and Lindquist (2011), Riphahn and Schieferdecker (2011), and Wilson et al. (2011) are some more recent empirical studies.

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Acknowledgements

We are grateful to two anonymous referees for constructive comments and suggestions, which improved the paper significantly. The research is financed by the National University of Singapore (grant # R122000117).

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Authors and Affiliations

  1. Department of Economics, Lingnan University, Tuen Mun, Hong Kong

    C. Simon Fan

  2. Department of Economics, National University of Singapore, Singapore, 117570, Singapore

    Jie Zhang

  3. Chongqing University, Chongqing, China

    Jie Zhang

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  1. C. Simon Fan
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Correspondence to Jie Zhang.

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Responsible editor: Junsen Zhang

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Fan, C.S., Zhang, J. Differential fertility and intergenerational mobility under private versus public education. J Popul Econ 26, 907–941 (2013). https://doi.org/10.1007/s00148-012-0445-5

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