A Theory of Endogenous Fertility with Occupational Choice

Authors

Silvia Prina
Dilip Mookherjee
Debraj Ray

Published

American Economic Journal - Microeconomics, vol. 4, issue 4, pp. 1-34, November 2012

Website

http:// www.aeaweb.org/articles.php?doi=10.1257/mic.4.4.1

Abstract

Theories based on partial equilibrium reasoning alone cannot explain the widespread negative cross-sectional correlation between parental wages and fertility, without restrictive assumptions on preferences and childcare costs. We argue that incorporating a dynamic general equilibrium analysis of returns to human capital can help explain observed empirical patterns. Other by-products of this theory include explanations for intergenerational mobility without stochastic shocks, connections between mobility and fertility patterns, and locally determinate steady states. Comparative statics exercises on steady states shed light on the effects of education, childcare subsidies, child labor regulations, and income redistribution policy on long run living standards.