This paper provides a unified theory of the economic and demographic transition. The main mechanism is based on optimal decisions about fertility and time investments in heterogeneous types of human capital. These decisions depend on different dimensions of health, which themselves are...

In a stochastic economy with overlapping generations, fiscal policy affects the allocation of aggregate risks. The paper shows how to compute the welfare effects of marginal policy changes that shift risk across cohorts, in general and for an application to social security equity investments. I...