Human Capital and Economic Development

FRB of Atlanta Working Paper 2004-34

85 Pages Posted: 11 Jun 2002

See all articles by Robert Tamura

Robert Tamura

Clemson University - John E. Walker Department of Economics; Federal Reserve Bank of Atlanta

Date Written: December 2004

Abstract

This paper develops a general equilibrium model of fertility and human capital investment under uncertainty. Uncertainty exists in the form of a probability that a young adult does not survive to old age. Parents maximize expected utility arising from own consumption, their fertility, and the discounted utility of future generations. There exists a precautionary demand for children. Young adult mortality is negatively related to the average human capital of young adults. Therefore, rising human capital leads to falling mortality, which eventually induces a demographic transition and an acceleration in human capital investment. The model can fit data on world and country populations, per capita incomes, age at entry into the labor force, total fertility rates, life expectancy, conditional life expectancy, and infant mortality.

Keywords: Fertility, mortality, demographic transition, economic development

JEL Classification: O0, O57, O10, N10

Suggested Citation

Tamura, Robert, Human Capital and Economic Development (December 2004). FRB of Atlanta Working Paper 2004-34, Available at SSRN: https://ssrn.com/abstract=315042 or http://dx.doi.org/10.2139/ssrn.315042

Robert Tamura (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

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United States
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864-656-4192 (Fax)

Federal Reserve Bank of Atlanta

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