When I was doing my Honours degree in economics, I encountered the economics of fertility for the first time. The standard model for fertility came from Nobel Prize winner Gary Becker, and suggested that fertility decisions were based on a trade-off between the number of children (quantity) and investment in those children's education (quality). The literature has since moved on, and this recent NBER Working Paper (forthcoming in the Handbook of Family Economics; ungated version here), by Matthias Doepke (Northwestern University), Anne Hannusch (University of Mannheim), Fabian Kindermann (University of Regensburg), and Michèle Tertilt (University of Mannheim)reviews the current state of the field. A good summary of the (long and detailed) paper is in the introduction:
We start by reviewing the regularities that inspired the first generation of economic models of fertility. These include a negative relationship between income and fertility; a link between the demographic transition and economic development; and, at a later stage of development, a negative relationship between women’s labor force participation and fertility. We argue that economic models based on two main ideas, relating to the quantity-quality tradeoff and the opportunity cost of mother’s time, were able to account for these regularities.
Based on empirical research of the past two decades, we then show that these regularities no longer characterize today’s data. The income-fertility relationship is now largely flat within many countries and increasing in the cross-section of high-income countries. Recent work on the quantity-quality tradeoff argues that it is no longer detectable in high-income countries. Meanwhile, the relationship between women’s labor force participation and fertility across countries has reversed. Even within countries, the relationship between women’s education and their fertility is no longer always decreasing...
The new facts about fertility behavior in high-income countries do not mean that the ideas of a quantity-quality tradeoff or of a central role of the opportunity cost of mothers’ time were wrong. The tradeoffs emphasized by these models still exist and continue to be important in explaining fertility behavior in many places, including lower-income countries. What has changed, however, is that these tradeoffs no longer drive the major variation in the data for high-income countries...
...in high-income countries, child labor has disappeared and education for most children continues past childhood into the adult years. These changes imply that the tradeoff inherent in quantity-quality models between sending children to school versus having more resources to raise a larger family has lost salience. Similarly, models based on women’s opportunity cost of time posit that raising more children requires mothers to spend less time working in the market. While this tradeoff still exists today, it has weakened as alternative forms of childcare have become more prominent. When childcare is provided by someone other than the mother—whether a hired nanny, a government-run kindergarten, or the child’s father—the cost of children is no longer linked as directly to the mother’s opportunity cost of time...
...the compatibility of family and career has become a key determinant of fertility in high-income economies. Where the two are easy to combine, many women have both a career and multiple children, resulting in high fertility and high female labor force participation. When career and family goals are in conflict, fewer women work and fewer babies are born. We point out four factors that help mothers combine a career with a larger family: the availability of public child care and other supportive family policies; greater contributions from fathers in providing childcare; social norms in favor of working mothers; and flexible labor markets.
Doepke et al. also suggest some promising areas for future research on the economics of fertility, including research on parental time use and the intensity of parenting (probably using time use diary data or similar), extending existing models to account for the extended family and heterogeneity in family types (including same-sex couples), and exploring the macroeconomic consequences of sustained below-replacement fertility.
As well as being a thorough review of the literature, the paper also has some insights that are interesting in their own right, such as the unintended consequences of fertility treatments (or offsetting behaviour), where Doepke et al. note that:
...the very availability of IVF treatments causes women to delay their entire fertility planning further into later periods characterized by lower IVF success, thereby rendering the technology less effective.
Sadly, the economics of fertility (and population economics more generally) continues not to get the attention it deserves. At least, the state of the art is now summarised in one place.
[HT: Marginal Revolution, last year]
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