Effect of fertility on household welfare in Iran, with regard to human capital

Considering the changes in fertility in Iran during recent decades and the importance of fertility changes and consequently demographic changes and their effect on economic growth and development, the effect of the number of children with regard to human capital on economic well being has been considered. In this paper, a two-part model consisting of a household and a firm in the form of three-dimensional overlapping generations has been created. Then, after optimizing the behavior of the agent, and then calibrating the model parameters using the Gaussian method in the software, the model by using Iran's economy data, during 1965-95 was solved. Findings of the study show that the proportion of skilled people decreases if households decide to have fewer children or implement policies that lead to such decisions by households.In other words, unskilled children increases regardless of whether their parents are skilled or unskilled. Thus, the amount of human capital that has been considered as the main driver of economic growth has declined, leading to a decline in production, employment, growth and economic prosperity. In other words, the results of the model's solving showed a reduction in the fertility of human capital and economic well-being.