Population growth overshooting and trade in developing countries

This paper examines a developing economy using a family-optimization model in which the number of children is a normal good. Trade liberalization generates two effects: the income effect that increases population growth and the gender wage effect that, in the short run, increases, but, in the long run, decreases population growth. With higher income, families invest more in capital if the status of the capital is significant. Because female labor is complementary to capital, higher investment increases the relative wages of women and attracts them from child rearing into production. Ultimately, the population growth falls below the original level.