🌐ENGLISH

Senior Researcher, DEPOCEN
Visiting reseacher, Graduate School of Economics and Management, Tohoku University

This paper examines the long-term consequences of population decline in an endogenous growth framework with stochastic labor-augmenting technological progress. The key factor in fertility decisions is the cost of child-rearing, which is modeled as a convex function of labor productivity. As technology grows, the costs of raising children (including childbear- ing, childcare, and educational investments) increase disproportionately. While the economy may experience rapid growth in the early stages of de- velopment, it is likely to face sharp contractions in both population and innovation as child-rearing costs outpace the incentives for having chil- dren. We show that consistent population decay is almost inevitable. Nev- ertheless, a pronatalist policy can increase the likelihood of achieving high long-run labor productivity and living standards for future generations, although some short-run welfare deficits are to be expected.