Demographic Transition and Economic Welfare: The Role of In-Cash and In-Kind Transfers

29 Pages Posted: 28 Sep 2014 Last revised: 1 Sep 2016

See all articles by Stephen M. Miller

Stephen M. Miller

University of Nevada, Las Vegas - Department of Economics; University of Connecticut - Department of Economics

Kyriakos C. Neanidis

University of Manchester - School of Social Sciences

Date Written: September 26, 2014

Abstract

Do in-cash and in-kind transfers to families affect parental fertility choices and economic welfare differently? We examine this question via a demographic transition channel in the context of a two-period overlapping generations model. In childhood, reproductive agents face a non-zero probability of death, while as adults, they allocate their time to work, leisure, and child rearing activities. Health status in adulthood exhibits “state dependence,” as it depends on health in childhood. We find that cash transfers lead to both higher fertility and welfare if parents strongly value the quantity of their children. This positive welfare effect dominates an indirect negative welfare effect due to a lower growth rate. But, if parents value the quality of their children, in-kind transfers yield greater welfare, along with lower fertility and higher economic growth.

Keywords: fertility, health, growth, transfers, welfare

JEL Classification: F35, F43, I12, O41

Suggested Citation

Miller, Stephen M. and Neanidis, Kyriakos C., Demographic Transition and Economic Welfare: The Role of In-Cash and In-Kind Transfers (September 26, 2014). Quarterly Review of Economics and Finance, November 2015. Available at SSRN: https://ssrn.com/abstract=2502154 or http://dx.doi.org/10.2139/ssrn.2502154

Stephen M. Miller (Contact Author)

University of Nevada, Las Vegas - Department of Economics ( email )

4505 S. Maryland Parkway
Box 456005
Las Vegas, NV 89154
United States
702-895-3776 (Phone)
702-895-1354 (Fax)

HOME PAGE: http://faculty.unlv.edu/smiller/

University of Connecticut - Department of Economics

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States

Kyriakos C. Neanidis

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom
+44-161-275-4832 (Phone)
+44-161-275-4812 (Fax)

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