“The Dynamics of Income, Schooling, and Fertility Distributions over the Course of Economic Development: A Human Capital Perspective” by Isaac EHRLICH
State University of New York at Buffalo and NBER
We model the dynamic evolution of income, schooling, and fertility distributions over the course of economic development, treating measures of all three distributions as interrelated, endogenous variables. The model offers, in part, a dynamic extension of Becker's (1967) model of income distribution within an endogenous-growth setting where heterogeneous families determine fertility, human capital investments in children, and savings, and generations are linked through intra-family and inter-family interactions. We develop and test through simulations and regression analyses propositions concerning the comparative levels and dynamic evolution of inequalities in fertility, schooling attainments, and three income inequality measures – family income inequality, income-group inequality, and the Gini coefficient – over three phases of economic development. In this context, we also reexamine the “Kuznets hypothesis” concerning the relation between income inequality and income growth over a transitional development phase.