Working Paper: CEPR ID: DP12884
Authors: David de la Croix; Aude Pommeret
Abstract: Having children is like investing in a risky project. Postponing birth is like delaying anirreversible investment. It has an option value, which depends on its costs and benefits,and in particular on the additional risks motherhood brings. We develop a parsimonioustheory of childbearing postponement along these lines. We derive its implications for assetaccumulation, income, optimal age at first birth, and childlessness. The structural parametersare estimated by matching the predictions of the model to data from the NationalLongitudinal Survey of Youth NLSY79. The uncertainty surrounding income growth isshown to increase with childbearing, and this increase is stronger for more educated people.This effect alone can explain why the age at first birth and the childlessness rateboth increase with education. We use the model to simulate two hypothetical policies.Providing free medically assisted reproduction technology does not affect the age at firstbirth much, but lowers the childlessness rate. Insuring mothers against income risk ispowerful in lowering the age at first birth.
Keywords: Late Parenthood; Real Option; Career Uncertainty; Assisted Reproduction Technology
JEL Codes: J13; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Income risk (G52) | Childbearing decisions (J13) |
| Free medically assisted reproduction technology (J13) | Lower childlessness rates (J13) |
| Increased risks associated with motherhood (J13) | Increased value of postponing childbirth (J17) |
| Increased education (I29) | Delayed childbirth (J13) |
| Increased education (I29) | Higher childlessness rates (J13) |
| Uncertainty surrounding income growth (D89) | Increased childbearing postponement (J13) |
| Higher education (I23) | Later age at first birth (J19) |