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Banking on fewer children: Financial intermediation, fertility and economic development

Author

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  • Carol Scotese Lehr

    (Virginia Commonwealth University, Department of Economics, Box 844000, Richmond, VA 23284-4000, USA)

Abstract

This paper shows that financial intermediation can influence fertility and labor allocation decisions by raising market wages. The increase in wages induces some households to abandon "traditional" labor intensive methods of production managed at the household level and supply labor to "modern" sector firms. Since it is optimal for households in the modern sector to have fewer children, the labor allocation decision leads to lower national fertility. A panel VAR using financial intermediation, fertility and industrial employment share data in 87 countries is estimated. The empirical results show that the data are consistent with the theoretical predictions.

Suggested Citation

  • Carol Scotese Lehr, 1999. "Banking on fewer children: Financial intermediation, fertility and economic development," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 567-590.
    • Handle: RePEc:spr:jopoec:v:12:y:1999:i:4:p:567-590
    Note: Received: 20 October 1997/Accepted: 31 August 1998
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    Citations

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    Cited by:

    1. Horváth, Csilla & Wieringa, Jaap E., 2003. "Combining time series and cross sectional data for the analysis of dynamic marketing systems," Research Report 03F13, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. Filoso, Valerio & Papagni, Erasmo, 2015. "Fertility choice and financial development," European Journal of Political Economy, Elsevier, vol. 37(C), pages 160-177.

    More about this item

    Keywords

    Financial intermediation · fertility · economic development;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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