Does fertility affect growth? Evidence and simulation results from alternative quantile regression estimators

Abstract

While the effect of various factors on fertility choice has been intensively studied, few studies identify declining fertility's impact on subsequent growth. We employ instrumental variables derived from spatial interactions across 5564 cities to identify the heterogeneous effects of declining fertility on subsequent economic growth in Brazil's city-level data. The gain by reducing one birth may translate to a cumulative growth increase of 0.5 percentage points in places where the pace of economic development is low. On the median, the extent of the estimate suggests that a unity decrease in the total fertility rate might lead to an increase in cumulative growth of 0.25 percentage points in the following ten years. The simulation results, designed for two-stage quantile regression estimators, indicate the sample sizes for which the asymptotic properties tend to hold and show that the convolution-smoothed approach with the triangular kernel performs better in finite samples in most scenarios.