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Actually they do, if you build new houses for them. As for having more children in the "family" house, i dont think this happens, or would you consider procreation with family members?
Ok, I thought that some of the adult childrens lived with their parents-in-law. I didn't monitor who is related to whom ;-) So it's obvious that I need to reach a minimum size in order to have enough young citizens once the old ones die of old age.
Build too few houses and you population stagnates which will kill you once people die of old age, nuild too many houses and people starve and/or freeze to death...
With that, you don't encounter famine, and you expand nicely.