No matter from the objective trend of fertility rate, the subjective wishes of residents, the cost conditions of raising offspring, or the size of the first marriage population, the declining trend of China’s fertility rate may be difficult to reverse. Therefore, how to reasonably arrange technology investment and public education investment under a given fertility rate to keep economic growth is the main challenge China is currently facing. Starting from the government’s role as a central planner of the tax administrator and an investor in educational and technological infrastructure, we analyze the impact of changes in the fertility rate on government investment in technology and public education by constructing a general equilibrium model with overlapping generations. Using equilibrium of technology investment and public education investment as an intermediary, we further analyze the impact of fertility rate on wage, capital return rate, output, and lifetime utility of agents.
The results show that: As long as the government’s goal is to maintain the lifetime utility of the agent, low fertility may increase technology investment and education expenditure, but whether it can promote economic growth and residents’ welfare depends on the ratio between birth & education costs and total wealth. Simulation shows that: Under the current production pattern, if the ratio is lower than 45.0%, low fertility may promote economic growth and vice versa; if the ratio is higher than some particular value, the process of low fertility may promote residents’ welfare and vice versa. Under the current fertility rate, the condition of keeping economic growth is satisfied but keeping residents’ welfare is not. That is, no specific fertility rate range can simultaneously raise residents’ welfare and keep economic growth. A slight increase in the fertility rate to about 1.6 can promote sustained economic growth and per capita income, but the welfare of agents would be harmed because of not being able to enjoy the dividends of economic growth. Therefore, under the current production pattern, the government should adopt a controllable fertility stimulus policy to increase the fertility rate slightly, optimize the pension system to increase inter-generational connections, and optimize the industrial structure, the educational pattern, and the way of R&D research to gradually transform the social production pattern. This paper provides a theoretical basis for studying the impact path of the process of low birthrate on technology investment and public education investment under the state of population structure in the new era, and provides numerical support for adjusting the mediating effect of technology investment and public education investment and formulating reasonable fertility rate goals.