Working Paper: NBER ID: w22068
Authors: Matthias Doepke; Michle Tertilt
Abstract: Much of macroeconomics is concerned with the allocation of physical capital, human capital, and labor over time and across people. The decisions on savings, education, and labor supply that generate these variables are made within families. Yet the family (and decision-making in families) is typically ignored in macroeconomic models. In this chapter, we argue that family economics should be an integral part of macroeconomics, and that accounting for the family leads to new answers to classic macro questions. Our discussion is organized around three themes. We start by focusing on short and medium run fluctuations, and argue that changes in family structure in recent decades have important repercussions for the determination of aggregate labor supply and savings. Next, we turn to economic growth, and describe how accounting for families is central for understanding differences between rich and poor countries and for the determinants of long-run development. We conclude with an analysis of the role of the family as a driver of political and institutional change.
Keywords: No keywords provided
JEL Codes: E2; E3; J10; J20; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| changes in family structure (J12) | aggregate labor supply (J20) |
| changes in family structure (J12) | savings rates (D14) |
| fertility rates (J13) | aggregate labor supply (J20) |
| female labor participation (J21) | aggregate labor supply (J20) |
| changes in family structure (J12) | great moderation in economic fluctuations (E32) |
| interaction between parents and children (J13) | educational decisions (I28) |
| educational decisions (I28) | economic growth (O49) |
| rise in female labor force participation (J21) | jobless recoveries (J64) |
| family structures (J12) | political and institutional changes (O17) |