Why did rich families increase their fertility? Inequality and marketization of child care

Abstract

A negative relationship between income and fertility has persisted for so long that its existence is often taken for granted. One economic theory builds on this relationship and argues that rising inequality leads to greater differential fertility between rich and poor. We show that the relationship between income and fertility has flattened between 1980 and 2010 in the US, a time of increasing inequality, as high income families increased their fertility. These facts challenge the standard theory. We propose that marketization of parental time costs can explain the changing relationship between income and fertility. We show this result both theoretically and quantitatively, after disciplining the model on US data. We explore implications of changing differential fertility for aggregate human capital. Additionally, policies, such as the minimum wage, that affect the cost of marketization, have a negative effect on the fertility and labor supply of high income women. We end by discussing the insights of this theory to the economics of marital sorting.

Comparative Advantage and Moonlighting

“…This general pattern is consistent with findings byBar et al (2018) who find an increase in fertility among higher income families over the past 25 years.…”

“…This leads us to conclude that children are, indeed, a significant determinant in the decision to hold a second job. For skilled workers the number of children actually increased (see Bar et al, 2018) from 1.15 to 1.16, which by itself increases the proportion of multiple jobholders.…”

Bargaining over Babies: Theory, Evidence, and Policy Implications

“… See Feyrer, Sacerdote, and Stern (2008) andDoepke and Tertilt (2016) on the empirical pattern, and DaRocha and Fuster (2006), de Laat and Sevilla-Sanz (2011),Hazan and Zoabi (2015),Siegel (2017) andBar et al (2018) on potential channels that can account for some of the changing relationships between women's education, labor supply, and fertility.…”

The education gender gap and the demographic transition in developing countries

“…Indeed, the phenomenon of a demographic transition is one of the key features of the unied growth theory rst advanced by Galor and Weil (2000) Thus, the rise in demand for human capital and the decline in gender gap have been documented as the major causes of demographic transition. 4 Galor and Weil (1996) advanced an alternative unied growth model showing that the decline in the wage gender gap resulting from physical capital being more complementary to women's labor than to men's plays a central role in generating a decline in fertility too.…”