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Fertility subsidies can have ambiguous effects on birth timing

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  • Naidoo, Jesse

Abstract

Pronatalist subsidies often vary with birth order (parity). I study the effect of such subsidies on birth timing in a life-cycle model of fertility choice. In the model, births permanently reduce the rate of human capital accumulation. While subsidies to marginal births always accelerate the time to next birth, subsidies to higher-order births can extend those times for women at low parities. The result is not driven by income effects, quantity-quality substitution, biological constraints, or uncertainty. Instead, it is that slower anticipated earnings growth in the future raises the marginal value of human capital in the present.

Suggested Citation

  • Naidoo, Jesse, 2023. "Fertility subsidies can have ambiguous effects on birth timing," Economics Letters, Elsevier, vol. 229(C).
    • Handle: RePEc:eee:ecolet:v:229:y:2023:i:c:s0165176523002409
    DOI: 10.1016/j.econlet.2023.111215
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    References listed on IDEAS

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    More about this item

    Keywords

    Fertility; Life-cycle; Birth spacing; Human capital;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving

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