Longevity, Fertility and Economic Growth: Do Environmental Factors Matter?

Abstract

Our study examines the effect of environmental factors on the economic decisions regarding fertility. We incorporate health-damaging pollution into a three period overlapping generations model in which life expectancy, fertility and economic growth are all endogenous. We show that environmental factors can cause significant changes to the economy's demographics. In particular, the entrepreneurial choice of less polluting production processes, induced by a tax on emissions, can at some point in time lead to such changes as higher longevity and lower fertility rates. Thus, we provide a novel explanation on the positive relation between fertility rates and pollution. According to this, the causality on this relation may also work from the latter to the former. Furthermore, our model can account for the empirically observed N-shaped correlation between pollution and income per capita.

Altruism, environmental externality and fertility

“…2 This may imply that, while excessive population growth is considered to be a major environmental threat, environmental degradation can be ongoing even without population growth. The N-shaped correlation between pollution and income per capita, which is proposed by empirical studies such as de Bruyn et al (1998), Friedl and Getzner (2003), and Martínez-Zarzoso and Bengochea-Morancho (2004), and provided with a rationale by Varvarigos and Zakaria (2017), is in line with this observation. According to the N-shaped curve, where pollution correlates positively with income per capita in a later stage of development, even under a low fertility rate, pollution may increase as long as income per capita grows in a high-income country.…”

“…In particular, we could have incorporated economic growth, for example, by extending the model to an overlapping generations model, so that we could analyze the case of low-income countries with excessive population growth, and/or N-shaped correlation between pollution and income per capita. Furthermore, endogenous longevity could provide another channel enriching the linkages between population and environment, because pollution should have a direct effect on health and longevity (Varvarigos, 2010; Varvarigos and Zakaria, 2017), and also longevity should affect fertility decisions (Hirazawa and Yakita, 2017).…”

“…Among studies on the effect of environmental factors on fertility without altruism, Varvarigos and Zakaria (2017) incorporate endogenous fertility decisions into Varvarigos (2014), which derives multiple equilibria characterized by higher (lower) income with higher (lower) environmental quality and higher (lower) longevity, and show the positive relation between pollution and fertility rates 6 . Moreover, they show that, in the presence of an emission tax, the economy experiences a reduction in the fertility rate at some point in the process of development, due to the entrepreneurial choice of less polluting production method.…”

“…A similar result is obtained inDasgupta (1995Dasgupta ( , 2000, which explored the mutual influences between population growth, a worsening of poverty and natural resource degradation in poor countries (i.e., population-poverty-resource nexus). However, the mechanism is entirely different betweenDasgupta (1995Dasgupta ( , 2000 andVarvarigos and Zakaria (2017).7 De la Croix and Gosseries (2012) also analyze the influence of environment and environmental policy on fertility rate. They show that pollution control (capping emissions) increases population and decreases production per worker through substitution of child rearing for production in a household.…”

Enterprises Development: Management Model

“…1, 2018 to many scientists, social, economic, and environmental development (Bhattacharya et al, 2015;Klapper et al, 2016;Satterthwaite, 1997) are integrated into sustainable development concept. Environmental factors, in turn, impact economic growth, and the demographic situation, birth rate (Varvarigos et al, 2017).…”