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Are Children Really Inferior Goods? Evidence from Displacement-Driven Income Shocks

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  • Jason M. Lindo

Abstract

This paper explores the causal link between income and fertility by analyzing women’s fertility response to the large and permanent income shock generated by a husband’s job displacement. I find that the shock reduces total fertility, suggesting that the causal effect of income on fertility is positive. A model that incorporates the time cost of children and assortative matching of spouses can simultaneously explain this result and the negative cross-sectional relationship. I also find that a husband’s displacement accelerates childbearing, which is consistent with lifecycle models of fertility in which the incentive to delay is driven by expected earnings growth.

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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 45 (2010)
Issue (Month): 2 ()
Pages:

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Handle: RePEc:uwp:jhriss:v:45:y:2010:i2:p301-327

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Web page: http://jhr.uwpress.org/

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Cited by:
  1. Michael Lovenheim & Kevin Mumford, 2010. "Do Family Wealth Shocks Affect Fertility Choices? Evidence from the Housing Market Boom and Bust," Discussion Papers, Stanford Institute for Economic Policy Research 09-004, Stanford Institute for Economic Policy Research.
  2. 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.
  3. Kristiina Huttunen & Jenni Kellokumpu, 2012. "The Effect of Job Displacement on Couples? Fertility Decisions," Working Papers, Government Institute for Economic Research Finland (VATT) 29, Government Institute for Economic Research Finland (VATT).
  4. Hashimoto, Yuki & Kondo, Ayako, 2012. "Long-term effects of labor market conditions on family formation for Japanese youth," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 1-22.
  5. Riddell, W. Craig, 2011. "Unemployment Compensation and Adjustment Assistance for Displaced Workers: Policy Options for Canada," CLSSRN working papers, Vancouver School of Economics clsrn_admin-2011-31, Vancouver School of Economics, revised 22 Dec 2011.
  6. Burlando, Alfredo, 2014. "Transitory shocks and birth weights: Evidence from a blackout in Zanzibar," Journal of Development Economics, Elsevier, Elsevier, vol. 108(C), pages 154-168.
  7. Aliaksandr Amialchuk & Maksim Yemelyanau & Katerina Lisenkova & Mykhaylo Salnykov, 2011. "Economic Determinants of Fertility in Belarus: a Micro-Data Analysis," BEROC Working Paper Series, Belarusian Economic Research and Outreach Center (BEROC) 13, Belarusian Economic Research and Outreach Center (BEROC).
  8. Lindo, Jason M., 2011. "Parental job loss and infant health," Journal of Health Economics, Elsevier, Elsevier, vol. 30(5), pages 869-879.
  9. Jessamyn Schaller & Ann Huff Stevens, 2014. "Short-run Effects of Job Loss on Health Conditions, Health Insurance, and Health Care Utilization," NBER Working Papers 19884, National Bureau of Economic Research, Inc.
  10. Andrea Menclova, 2013. "The Effects of Unemployment on Prenatal Care Use and Infant Health," Journal of Family and Economic Issues, Springer, Springer, vol. 34(4), pages 400-420, December.
  11. Dettling, Lisa J. & Kearney, Melissa S., 2014. "House prices and birth rates: The impact of the real estate market on the decision to have a baby," Journal of Public Economics, Elsevier, Elsevier, vol. 110(C), pages 82-100.

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