We thank Todd Schoellman, John Knowles, and the participants at the NBER pre-conference in Boston, the Stanford Junior Faculty Bag Lunch, and the Economics and Demography conference in Napa California for helpful suggestions. We thank Amalia Miller in particular for a thoughtful discussion.
The Barro-Becker model is a simple intuitive model of fertility choice. In its original formulation, however, it has not been very successful at reproducing the changes in fertility choice in response to decreased mortality and increased income growth that demographers have emphasized in explaining the demographic transition. In this paper we show that this is due to an implicit assumption that number and utility of children are complements, which is a byproduct of the high intertemporal elasticity of substitution (IES) typically assumed in the fertility literature. We show that, not only is this assumption not necessary, but both the qualitative and quantitative properties of the model in terms of fertility choice change dramatically when substitutability and high curvature are assumed. To do so, we first derive analytical comparative statics and perform quantitative experiments. We find that if IES is less than one, model predictions of changes in fertility amount to about two-thirds of those observed in U.S. data since 1800. There are two major sources to these predicted changes, the increase in the growth rate of productivity which accounts for about 90 percent of the predicted fall in fertility before 1880, and changes in mortality which account for 90 percent of the predicted change from 1880 to 1950.
Is there an economic rationale for pronatalist policies? We propose and analyze a particular market failure that leads to inefficiently low fertility in equilibrium. The friction is caused by the lack of ownership of children: if parents have no claim on their children's income, the private benefit from producing a child can be smaller than the social benefit. We analyze an overlapping-generations model with fertility choice and parental altruism. Ownership is modeled as a minimum constraint on transfers from parents to children. Using the efficiency concepts proposed in Golosov, Jones, and Tertilt (2007), we find that whenever the transfer floor is binding, fertility choices are inefficient. Second, we show that the usual conditions for efficiency are not sufficient in this context. Third, in contrast to settings with exogenous fertility, a PAYG social security system cannot be used to implement efficient allocations. To achieve an efficient outcome, government transfers need to be tied to fertility choice. JEL Classification: D6, E1, H55, J13
Demographers emphasize decreased mortality and "economic development" as the main contributors generating the demographic transition. Contrary to previous findings, we show that simple dynastic modelsà la Barro-Becker can reproduce observed changes in fertility in response to decreased mortality and increased productivity growth if the intertemporal elasticity of substitution is low enough. We show that this is largely due to number and welfare of children being substitutes in the utility of parents in this case. We find that with an IES of one-third, model predictions of changes in fertility amount to two-thirds of those observed in U.S. data since 1800.
Tertilt for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe most commonly used measure of reproductive behavior is the total fertility rate (TFR), which is a measure of the number of children born per woman. However, almost no work exists measuring the fertility behavior of men. In this paper we use survey data from several recent waves of the Demographic and Health Surveys in six developing countries in which men and women were each asked about their reproductive histories. We document a number of interesting differences in fertility outcomes of men and women. First, while one might have thought that average rates for men and women must coincide, we find that this is not the case. Comparing completed fertility by birth cohorts, we find that on average men have more children than women in four out of the six countries we consider. The gaps are large -reaching up to 4.6 children in Burkina Faso for the 1944-48 birth cohort. We show that positive gaps are possible when populations are growing and men father children with younger women. Such a situation often coincides with polygyny, i.e. men having children with more than one woman. Indeed we find that the size of the fertility gap is positively related to the degree of polygyny in the country. Second, we find a higher variance in fertility rates for men than for women. In other words, women are more similar to each other in reproductive behavior than men are to one another. Third, we find that differences in the desire to have children can largely be explained by differences in realized fertility.This implies that differences in fertility preferences often emphasized in the literature do not necessarily need to cause conflict, as men and women can realize their fertility individually.Finally, we find that for men, the demographic transition started earlier and was steeper than for women. These novel facts are useful when building theories of fertility choice. * We would like to thank Pascal Schmidt and Inken Toewe for excellent research assistance. We also thank seminar participants at the University of Mannheim for valuable comments.
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