Developing countries with highly unequal income distributions, such as Brazil or South Africa, face an uphill battle in reducing inequality. Educated workers in these countries have a much lower birth rate than uneducated workers. Assuming children of educated workers are more likely to become educated, this fertility differential increaases the proportion of unskilled workers, reducing their wages, and thus their opportunity cost of having children, creating a vicious cycle. A model incorporating this effect generates multiple stedy-state levels of inequality, suggesting that in some circumstances, temporarily increasing access to educational opportunities could permanently reduce inequality. Empirical evidence suggests that the fertility differential between the educated and uneducated is greater in less equal countries, consistent with the model.
An earlier version of this paper was published in the AEA Papers and Proceedings, May 1999 and is also available here.
Daniel L. Chen & Michael Kremer, Income Distribution Dynamics With Endogenous Fertility, 7 Journal of Economic Growth 227-258 (2002)
Library of Congress Subject Headings
Equality, Fertility, Income distribution