Population growth and intergenerational mobility

Incorporating population growth into a simplified version of Maoz and Moav (1999), this article analyzes the effect on the relationship between intergenerational mobility and economic development. If the fertility is the same across income groups, population growth does not influence the basic dynamics of the economy. With, however, the fertility difference, population growth plays a crucial role in characterizing the intergenerational mobility. Suppose, in particular, that the fertility of the educated is higher than that of the uneducated. Then the share of the educated increases sharply due to the fertility difference. This sharp increase largely raises the average wage in the economy, which in turn boosts the education cost. The large increase in the education cost facilitates downwards mobility, and hence decreases the population share of the educated. Thus, if the fertility difference is large enough, the mobility exhibits cyclical behaviour. In contrast, if the fertility of the uneducated is higher than or equal to that of the educated, the same dynamics as in Maoz and Moav (1999) appears.