Saving, fertility and public policy in an overlapping generations small open economy

Spataro, Luca; Fanti, Luciano; Pacini, Pier Mario

doi:10.1016/j.econmod.2018.12.003

Cited by 4 publications

(1 citation statement)

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“…For example, if China introduces a three-child policy in May 2021, where a couple is allowed to have three children, then ξ = 3. Theoretical and data studies have shown that the savings rate tends to increase as the number of children in a family increases [55,56]. Let Z be the factors that affect the saving rate besides the fertility policy, such as the market interest rate and total income.…”

Section: Theoretical Mechanism Analysismentioning

confidence: 99%

Mechanisms of the effect of fertility policies on the labor-capital income gap

Cui,

Wan,

Zheng

2024

PLoS ONE

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This paper investigates the impact mechanism by which an incentive-based fertility policy may reduce the labor income share. First, the specific paths through which this impact mechanism is realized are analyzed using the production function. It is found that an incentive-based fertility policy triggers high savings, which implies more, cheaper, and more readily available capital to be invested in production. A distribution system that earns income based on factor contributions results in more gains for capital than labor, i.e., a lower share of labor income and a wider income gap between labor and capital. Second, the impact mechanism includes three theoretical hypotheses. They are that an encouraging fertility policy is negatively related to labor income share; this relationship is valid provided that the study subject is in a closed economy; and that capital intensification is a mediator variable of fertility policy affecting labor income share. Finally, to further corroborate the impact mechanism in this paper, a Hansen threshold panel model is applied to verify that the effect of fertility policy on labor income share has a threshold effect. This indicates that the effect of the former on the latter changes significantly before and after the change in fertility policy, confirming the existence of an impact mechanism. The established literature has paid little attention to the impact of incentivised fertility policies on the labour income gap. Using capital intensification as the mediating variable, this paper demonstrates the existence of the former effect on the latter. In view of this, under the encouraged fertility policy, this paper proposes specific measures to enhance the labor income share in order to narrow the income gap between labor and capital.

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Section: Theoretical Mechanism Analysismentioning

confidence: 99%