The Pennsylvania Model
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Contents:
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The Importance of Relative Income
In the Pennsylvania model, children are assumed to be a normal good in
the sense that when couples feel wealthier, they will have more children.
It is assumed that their expectations are formed during childhood and adolescence.
If their income is greater than their expected income, they will have more
children. If it is less than their expected income, they will have fewer
children. |
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The Easterlin Model
Easterlin assumed that the wages for entry level jobs varied inversely
with the number of new entrants. (The births 20 years earlier). On the other
hand, the number of births varied directly with the level of current incone
relative to already formed expectations. |
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The Parents of the Boomers
The parents of the boomers were born about 1935 when wages were unexpectedly
low due to the Great Depression. Because they were feeling relatively poor,
young people had relatively few children during the Depression. |
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The Boomers
The Boomers were a large cohort. When they entered the labor market,
wages for entry level positions fell well below what they had come to expect
living in the comfortable homes of their parents. Though their wages were
higher than the entry level wages of their parents twenty years earlier,
they felt poor relative to their expectations and responded by delaying
marriage and chilbearing and thus producing a small generation, "Generation
X". |
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Generation X
The children of the "Baby Boomers" are called "Generation
X". They ae a relatively small generation. Thus they were able to command
unexpectedly high wages when they entered the job market in the 1990s. It
remains to be seen whether their fertility patterns will be more like their
parents (the Baby Boom) or their grandparents (the Baby Bust). |
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The Easterlin Cycle
The graph on the right portrays the entire Easterlin cycle since the
Great Depression.
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Easterlin Over Time
The graph on the right is a stylized representation of the time path
of wages and births (in blue) and the time path of new entrants into the
labor force (in red). |
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