This paper demonstrates a pattern of the demographic transition and inter- and intra- generational inequalities in a simple model of endogenous growth with accidental bequests. In earlier phases of the modern growth regime, mortality decline encourages economic growth because it decreases the fertility rate and increases the saving rate. Since the income inequalities are worsened, we have a positive relationship between inequality and growth. In the process of aging, however, mortality decline may be harmful to economic growth because it deteriorates the income inequalities, which sharply decreases the saving rate. In this phase, we have a negative relationship between inequality and growth.
Abstract:
JEL Classification : D31, J13, O41