Abstract
The purpose of this paper is to investigate a simultaneous determinant mechanism between population change and economic growth using an overlapping generations model (0GM). Demand for children is classified into three types of utility according to Leibenstein's theory, and we focused on consumption utility and security utility. The model is constructed to denote the path of economic and population growth and to find steady state solutions. First, a traditional result, that a positive relationship between income and the demand for children is derived, and we show that the direct and indirect cost of children has a negative influence on child demand. Then, assuming particular production function, a dynamic economic path is calculated and some steady state solutions ascertained, which satisfy both child demand and capital accumulation simultaneously. Second, introducing a pension system, we investigate how the results on the above analysis were affected. As a result, a rise in pension benefits increased the demand for children, while an enrichment of the public pension reduces the level of capital stock since an increase in the cost of children induces private savings in a steady state. Finally, considering family allowances which support a rational individual in the decision to have children, we concluded that the policy which reduces the cost of children has a positive influence on the demand for children to a greater extent than the income policy which increases disposable earnings.
