A Macrosimulation Model of the Effect of Fertility on Economic Growth: Evidence from Nigeria

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

In this study, we investigate the economic effects of a decline in fertility. We use data from Nigeria and construct a macrosimulation model based on work by Ashraf et al. (2013), in which the evolution of key economic and demographic outcomes are observed under a “baseline” scenario, where fertility falls slowly over time, and are then compared to alternative scenarios in which fertility declines more rapidly. We extend the Ashraf et al. (2013) model to incorporate five channels that have been previously ignored: the effect of fertility on savings; a feedback from education to fertility; the effect of a more realistic two-sector model; the effect of fertility on health; and the effect of market imperfections. Compared to the Ashraf et al. (2013) results, adding these channels more than doubles the effect of a fertility decline on income per capita after 20 years and almost triples the effect after 50 years.

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Presented in Session 22: Demographic Dividend: Population Structure and Development