A macrosimulation model of the effect of fertility decline on economic growth in Africa

Mahesh Karra, Harvard University
David Canning, Harvard University
Joshua Wilde, University of South Florida

We investigate the effects of a decline in fertility on economic growth and development outcomes using a macrosimulation model. We incorporate three fertility effects that have previously not been included in such models: the effect of fertility on child health and later worker productivity, the effect of fertility and age structure on savings, and a feedback mechanism from changes in girl’s education induced by an initial fertility decline to later fertility. We also improve the model of the economy by incorporating a more realistic two-sector framework and by allowing for labor market imperfections. Using data from Nigeria, we find that adding these channels roughly doubles the effect of a fertility decline on income per capita after 50 years when compared to previous simulation results.