Working Paper: NBER ID: w14266
Authors: Larry E. Jones; Alice Schoonbroodt; Michele Tertilt
Abstract: In this chapter we revisit the relationship between income and fertility. There is overwhelming empirical evidence that fertility is negatively related to income in most countries at most times. Several theories have been proposed in the literature to explain this somewhat puzzling fact. The most common one is based on the opportunity cost of time being higher for individuals with higher earnings. Alternatively, people might differ in their desire to procreate and accordingly some people invest more in children and less in market-specific human capital and thus have lower earnings. We revisit these and other possible explanations. We find that these theories are not as robust as is commonly believed. That is, several special assumptions are needed to generate the negative relationship. Not all assumptions are equally plausible. Such findings will be useful to distinguish alternative theories. We conclude that further research along these lines is needed.
Keywords: fertility; income; economic theory; demographic transition
JEL Codes: D13; J13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| income (E25) | fertility (J13) |
| opportunity cost of time (J22) | fertility (J13) |
| wage heterogeneity (J31) | fertility (J13) |
| quantity-quality tradeoff (L15) | fertility (J13) |