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Does Housing Cost Affect Birth Rates in Taiwan? The ADL Test for Threshold Co-integration

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  • Wen-Yi Chen

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    (Department of Senior Citizen Service Management, National Taichung University of Science and Technology, Taichung, Taiwan.)

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    Abstract

    This study applied the ADL threshold co-integration model to investigate the relationship between fertility and housing cost in Taiwan. Our empirical results were in favor of the threshold co-integration relationship between crude birth rate and cost of childbearing, such as housing cost and opportunity cost. The asymmetric adjustment process of fertility toward the long-run equilibrium was verified. In general, the effects of housing cost and opportunity cost on fertility in the regime of upper threshold were more significant than that in the regime of lower threshold. Recognizing that housing cost is a major cost of childbearing in terms of family formation, the housing price policy should not be managed from the perspective of the equity of housing affordability but from the perspective of how to maintain the social security.

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    Bibliographic Info

    Article provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.

    Volume (Year): (2013)
    Issue (Month): 3 (October)
    Pages: 90-103

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    Handle: RePEc:rjr:romjef:v::y:2013:i:3:p:90-103

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    Keywords: ADL test; threshold co-integration; house price; low fertility;

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    1. Jing Li & Junsoo Lee, 2009. "ADL tests for threshold cointegration," SDSU Working Papers in Progress 22009, South Dakota State University, Department of Economics.
    2. Cheng, Benjamin S. & Nwachukwu, Savior L. S., 1997. "The effect of education on fertility in Taiwan: A time series analysis," Economics Letters, Elsevier, vol. 56(1), pages 95-99, September.
    3. Ahn, N. & Mira, P., 1999. "A Note on the Changing Relationship Between Fertility and Female Employment Rates in Developed Countries," Papers 9903, Centro de Estudios Monetarios Y Financieros-.
    4. John Ermisch, 1988. "Econometric Analysis of Birth Rate Dynamics in Britain," Journal of Human Resources, University of Wisconsin Press, vol. 23(4), pages 563-576.
    5. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    6. Palm, Franz C. & Smeekes, Stephan & Urbain, Jean-Pierre, 2010. "A Sieve Bootstrap Test For Cointegration In A Conditional Error Correction Model," Econometric Theory, Cambridge University Press, vol. 26(03), pages 647-681, June.
    7. Paresh Kumar Narayan & Stephan Popp, 2009. "A New Unit Root Test with Two Structural Breaks in Level and Slope at Unknown Time," Economics Series 2009_11, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
    8. Lisa J. Dettling & Melissa Schettini Kearney, 2011. "House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby," NBER Working Papers 17485, National Bureau of Economic Research, Inc.
    9. Klasen, Stephan & Launov, Andrey, 2003. "Analysis of the Determinants of Fertility Decline in the Czech Republic," IZA Discussion Papers 870, Institute for the Study of Labor (IZA).
    10. Bruce Sacerdote & James Feyrer, 2008. "Will the Stork Return to Europe and Japan? Understanding Fertility Within Developed Nations," NBER Working Papers 14114, National Bureau of Economic Research, Inc.
    11. George Kapetanios, 2005. "Unit-root testing against the alternative hypothesis of up to m structural breaks," Journal of Time Series Analysis, Wiley Blackwell, vol. 26(1), pages 123-133, 01.
    12. Krinsky, Itzhak & Robb, A Leslie, 1991. "Three Methods for Calculating the Statistical Properties of Elasticities: A Comparison," Empirical Economics, Springer, vol. 16(2), pages 199-209.
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