Testing Unified Growth Theory: Technological Progress and the Child Quantity–Quality Trade-off

CEGE Discussion Paper Number 393 – May 2020

31 Pages Posted: 1 Jun 2020

See all articles by Jakob Madsen

Jakob Madsen

Monash University

Holger Strulik

University of Goettingen (Göttingen) - School of Law, Economics, Social Sciences

Date Written: May 2020

Abstract

A core mechanism of unified growth theory is that accelerating technological progress induces mass education and, in interaction with child quantity-quality substitution, a decline in fertility. Using unique new data for 21 OECD countries over the period 1750-2000, we test, for the first time, the validity of this core mechanism of unified growth theory. We measure a country’s technological progress as patents per capita, genetic-distance weighted foreign patents, and investment in machinery, equipment and intellectual property products. Controlling for other confounders like income, mortality, the gender wage gap, indicators for child labor, compulsory schooling, and time- and country-fixed effects, we establish a strong positive impact of technological progress on investments in education and a strongly negative one on fertility. Using two-stage regressions, we assess the child quantity-quality substitution that can be motivated by technological change. We estimate that a 10 percent increase of enrollment in primary and secondary school is associated with a decline of the general fertility rate by 3 to 4 percent.

Keywords: technological progress, fertility, education, quantity-quality trade-off, unified growth theory

JEL Classification: O40, O30, N30, J10, I25

Suggested Citation

Madsen, Jakob and Strulik, Holger, Testing Unified Growth Theory: Technological Progress and the Child Quantity–Quality Trade-off (May 2020). CEGE Discussion Paper Number 393 – May 2020, Available at SSRN: https://ssrn.com/abstract=3591147 or http://dx.doi.org/10.2139/ssrn.3591147

Jakob Madsen (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Holger Strulik

University of Goettingen (Göttingen) - School of Law, Economics, Social Sciences ( email )

Germany

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