Impact of Subsidies on Evolution of Fertility and Human Capital in the Iranian Economy

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Farrokhi, Farid | 2010

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 46557 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Nili, Farhad
Abstract:
On the contrary to common explanations of fertility transition in the Iraninan Economy there has been a growing human capital without decline of fertility for some decades followed by a rapid fall in fertility without a higher growth of human capital during the next decades. Accounting for these facts we propose a new link between subsidies financed by exogenous oil revenue and the evolution of fertility and human capital. While the educational subsidy accelerates the growth of human capital, the presence of financial subsidies keeps fertility from declining. Then, fertility declines with sizeable delay but sharply because (i) high fertility in first generations implies a growth rate of population more than the growth rate of oil revenue and therefore, lowers the subsidy per capita in next generations; (ii) by increasing the real wage through human capital evolution, the income effect of financial subsidies on fertility would decrease; and finally (iii) educational subsidy brings about more access to education, less human capital dispersion, less differential fertility, and consequently higher average of human capital and less fertility rate
Keywords:
Oil Income ; Iran Economy ; Human Captial ; Fertility Transition ; Differential Fertility ; Subsidy

No TOC