Title: Endogenous Fertility Waves and the Dynamics of Utility in an Overlapping Generations Model

Original: arXiv:2606.02362v1 Announce Type: new Abstract: This paper investigates the conditions under which the Easterlin hypothesis holds within a neoclassical overlapping generations model with endogenous capital accumulation, wages, interest rates, and fertility. We develop a tractable analytical framework that maps economic transitions into utility space via a continuously differentiable first-order difference equation for cohort lifetime utilities. This reformulation allows for a transparent normative evaluation of non-steady-state paths without requiring explicit solutions to the underlying nonlinear system. Within this framework, we show that when fertility cycles emerge and children are normal goods, the utility of small cohorts strictly exceeds that of large cohorts. Crucially, this cohort-welfare asymmetry is driven by fertility preferences and is independent of the economy's position relative to the golden rule.

Rewritten:

Abstract:

This study examines the validity of the Easterlin hypothesis within a neoclassical overlapping generations framework that incorporates endogenous variables for capital accumulation, wages, interest rates, and fertility. By constructing a manageable analytical model, we translate economic transitions into utility space using a continuously differentiable first-order difference equation representing the lifetime utilities of various cohorts. This structural adjustment facilitates a clear normative assessment of paths that deviate from steady states, eliminating the need to derive explicit solutions for the complex nonlinear system. Our analysis reveals that if fertility exhibits cyclical behavior and children are classified as normal goods, smaller cohorts consistently achieve higher utility levels than larger ones. Importantly, this disparity in cohort welfare stems directly from fertility preferences and remains unaffected by where the economy stands in relation to the golden rule.

Source: arXiv Generated at: 2026-06-02 00:00:00 UTC